A winter forecasting enigma is poised to send prices for energy and food on a bumpy ride in the next few months, with commodities from natural gas to wheat at risk of breakneck gains against a backdrop of geopolitical turmoil.
Earlier in the year, meteorologists expected this December, January and February to be dominated by the La Niña climate pattern, which influences the world’s weather in specific ways. But La Niña has yet to arrive, and if it does, it will probably be weak. That makes the outlook for the northern hemisphere’s winter much more uncertain.
Already, some commodities markets are getting jumpy. European natural gas has soared as chilly conditions lift heating demand, while an escalation in the Ukraine war amplified concern about Russian supply disruptions. Goldman Sachs Group Inc. sees the potential for prices to climb more than 50% from current levels if intense cold emerges. US gas surged last month before paring gains, while wheat rallied on Black Sea tensions as drought threatens crops.
The winter forecasting woes are making it more difficult for traders to decide how to place their bets, magnifying the potential for sudden increases in energy and food prices in 2025. That would be a blow to consumers still grappling with sticker shock even as some central banks cut interest rates. It would also create political complications for global leaders including US President-elect Donald Trump, who has vowed to tackle inflation.
When forecasters make winter predictions, they often like to anchor their outlooks on the presence of La Niña, a cooling of the equatorial Pacific, or its opposite pattern, El Niño. La Niña would usually have led to colder weather in Japan and the US Pacific Northwest and milder readings in the large population areas of the US East Coast. But with La Niña expected to be weak — if it shows up at al— other patterns will have the potential to flip the outlook.
Playing a larger role this season will be the North Atlantic Oscillation, a see-saw of high and low pressure near Greenland. When it’s in its positive phase, cold spells in North America are usually fleeting. If it shifts to negative, however, it can cause frigid temperatures to become bottled up along the East Coast. Forecasts for the North Atlantic Oscillation typically only extend a couple of weeks out, so seasonal outlooks can’t take the pattern into account.
Another factor is the Madden-Julian Oscillation, a wave of disturbed weather that emerges from the Indian Ocean and travels the globe. It can inject energy into the jet stream patterns that steer storms, bringing more cold down from the Arctic in some cases or carrying mild air off the Pacific under other circumstances.
Polar Winds
Then there’s the so-called polar vortex, a girdle of winds that trap cold in the Arctic. If it breaks down, there’s a chance for a short-lived burst of frigid temperatures, said Judah Cohen, a scientist at Atmospheric and Environmental Research, an environmental modeling company.
When the winds circling the pole weaken, bone-chilling air rushes south into North America, Asia or Europe. In February 2021, a break in the polar vortex led a storm that killed more than 200 people across Texas and elsewhere in the US.
This year’s chill probably won’t last and the winter likely won’t end up as “a blockbuster,” Cohen said. Still, there are signs the dip in temperatures in the coming months will have some bite. This winter will be colder than last year’s, though it will be warmer than the the 10-year average, said Matt Rogers, president of commercial forecaster Commodity Weather Group.
Natural gas prices are already reacting to the risk of an Arctic blast. European gas has climbed 13% over the past month, while US gas jumped 24% in November before paring some gains as forecasts turned milder. In the US Midwest, gas heating bills are expected to rise about 11% this winter.
Delays to liquefied natural gas projects are constraining supply to Europe and “a colder-than-average start of the winter has exacerbated this tightening,” Goldman Sachs analysts led by Samantha Dart wrote in a note to clients late last month.
“This winter is shaping up to be significantly colder than a year ago, sharply increasing our expected heating demand,” Dart said.
Europe is in the midst of what is forecast to be its coldest winter since Russia’s invasion of Ukraine, with the continent already dipping deeper than usual into gas storage as temperatures plummet. While the winter is still due to be milder than the long-term average, traders are worried about the drop in temperatures — especially when wind generation has also fallen, with power and gas prices climbing in recent weeks.
Asia Outlook
In contrast, large swaths of of Asia from the Indian Ocean to the western Pacific, including many parts of the south, southeast and east, are expected to be milder, Japan Meteorological Agency’s predicted in October. That would likely limit the region’s demand for natural gas cargoes. The one exception to the warm pattern may be northeastern East Asia, the center said.
In China, higher-than-average temperatures are expected in most areas of the country, including up to 2C (3.6F) degrees above normal in a number of provinces both along the eastern coast and further inland, China Meteorological Administration’s National Climate Center said. As in Japan, there is a chance for colder temperatures in some spots, including northwestern Heilongjiang and northeastern Inner Mongolia.
Along with the potential for a deep freeze in parts of the northern hemisphere, there’s also the issue of drought. A lack of rain and snow across parts of China is threatening winter wheat crops. China faces problems with dry conditions in the south, which is also adding to woes for rapeseed, according to a report from the National Meteorological Centre in early November .
Lingering Drought
This mirrors the situation across the US Great Plains, where a drought is putting pressure on 50% of winter wheat crops, Mark Svoboda, director of the National Drought Mitigation Center, said in a call with reporters in November. Drought lingering into winter months will limit snowfall, which can insulate wheat plants from the worst of the season’s cold.
American farmers have also had to cull herds because of a lack of feed for the animals, Svoboda said.
A drier autumn in Europe initially delayed plantings for top wheat supplier Russia, where winter weather fluctuations can hurt crop development. “Milder temperatures followed by short, sharp cold snaps are still slightly problematic and can be a market focus point as we go into the new year,” said Tom Whittaker, a meteorologist at Aura Commodities.
All of these weather scenarios are occurring in the context of climate change. Winter is the fastest-warming season and many recent years have been milder than in decades past. Extreme ocean heat is roiling the weather around the world and creating fuel for natural disasters.
“The evolving weak La Niña is going to struggle to compete with effects of the raging, massive marine heat waves sprawled across much of the North Pacific and North Atlantic,” said Jennifer Francis, a climate scientist at the Woodwell Climate Research Center in Massachusetts.
Perhaps the only sure bet is volatility. Warm oceans will add to the difficulty of predicting the weather by fueling climate disasters, Francis said. In November, for example, elevated sea temperatures helped to strengthen the jet stream, driving a so-called bomb cyclone into Washington state and British Columbia and leaving hundreds of thousands of people without power. Meanwhile, warm Atlantic waters will favor storms tracking along the US East Coast.
“Because marine heat waves last tends to persist for weeks, they provide clues to weather regimes for months ahead,” Francis said.
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