Posted on February, 28, 2022 at 09:48 am
Samuel Clemens, also known as Mark Twain, once said, “Everybody talks about the weather, but nobody does anything about it.” However, that quote actually came from Charles Dudley Warner, Mark Twain’s friend.
Warner was an American essayist, novelist and friend of Twain, with whom he co-authored the novel, “The Gilded Age: A Tale of Today.”
My column this week is mostly about the weather. But understand clearly I will not do anything about it.
The weather I wish to begin with is the one in the American West that is, according to experts, into its 22nd year of a megadrought. A headline from the Canadian Broadcasting Corp. blares: “Megadrought worsens to driest in at least 1,200 years in western U.S.”
Here are a few statements from that article that I found amazing and scary: “The American West’s megadrought deepened so much last year that it is now the driest in at least 1,200 years and is a worst-case climate change scenario playing out live, a new study finds.
“A dramatic drying in 2021 — about as dry as 2002 and one of the driest years ever recorded for the region — pushed the 22-year drought past the previous record-holder of megadroughts, in the late 1500s, and shows no signs of easing in the near future.”
When discussing the weather it is normal to throw in some jokes. Here are a few:
1. What’s the difference between weather and climate? You can’t weather a tree, but you can climate.
2. Why did the woman go outdoors with her purse open? She expected some change in the weather.
3. How hot is it? It’s so hot that when I turned on my lawn sprinkler, all I got was steam.
4. What does everyone listen to, but no one believes? The weather reporter.
It is not a joke, however, about the impact weather can have on agricultural markets. In the western United States, the wheat crops are poised to grow in earnest and they need rain now.
There is not much media chatter about the dry conditions in the U.S. Plains, but if needed rainfall does not materialize by mid-March, there is no doubt in my mind that wheat prices will quickly catch a bid, and an aggressive one at that.
And do note the weather in Brazil has been hot and dry since November, and a few weeks ago they lowered the estimate of their soybean crops by a record amount.
Based on recent weather forecasts, the threatening weather will remain locked in place well into mid-March. If so, further reductions to their crops can be expected.
In my column, “Zero tolerance for yield loss,” from Dec. 10, I wrote: “Should there be a serious loss of yield with grains in the southern hemisphere in the next few months I can build a case for dramatically higher prices going into the growing season in the northern hemisphere.
“And what happens then if it is unusually hot and dry in July and August? I know what will happen, and so do you.”
The earliest bull market for grains in the United States began in April 1998, when the weather turned hot and dry in the Grain Belt. Soybean prices began to head north from the $6.60 level and by early July fell short of $10 by a few cents.
The point is not the size of the rally, but the fact it began so early in the growing season due to weather issues.
Historically speaking, a corn crop in the United States is made or broken in July and the same can be said of a soybean crop in August. Those are the crucial periods for both crops.
And if above-normal temperatures blast the Grain Belt with below-normal rainfall, yields will decline and so will production. This year more than any seen in decades, the marketplace will have zero tolerance for yield loss.
The United States and the globe are in the early stages of a commodity supercycle that will last for another eight to 10 years.
Mother Nature can have an outsized impact on grains and all other ag markets, here and abroad. It is not a joke about how fickle she can be — not a joke at all.
A megadrought is locked in place in the U.S. Plains. South America is plagued by threatening weather.
The growing season in the United States is unfolding with the crops desperate to skate past July and August without issues.
The weather is no longer a joke. And still no one is willing to step forward and do anything about it.
Source: AgriNews