La Niña weather condition map

La Niña is coming: Here’s what it means for commodity markets

MCHENRY, Ill. — If the La Niña weather phenomenon that’s forming in the equatorial Pacific Ocean reaches fruition, be prepared for wild commodity market rides.

La Niña impacts weather patterns worldwide and is associated with cooler, wetter conditions along the U.S.-Canadian border and warmer, drier conditions in much of the southern U.S. The phenomenon is caused by cooler Pacific water.

There’s no guarantee the La Niña will form, but if it does Erik Norland, CME Group executive director and senior economist, is concerned about the current agricultural markets.

“Corn, wheat and soy complex options implied volatilities are trading at or near record lows. This might mean that markets are woefully unprepared for a potential La Niña that would bring a wave of volatility,” he said in an Allendale Inc.-hosted webinar. Read more