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India’s agriculture sector accounts for around 14% of the country’s $2.7 trillion economy and 42% of total employment.
With around 55% of India’s arable land dependent on precipitation, the amount of rainfall during the current monsoon season could sway economic activity in the agriculture sector and industries linked to it.
The current flooding in parts of central and northern India has damaged the cotton crop and dry weather is needed for the harvest season for sugar cane and rice as well. Flooding may prompt the Indian government to raise minimum support prices for all of the current season’s crops to help support farmers’ incomes.
Given the terrible drought this summer to Texas cotton and now incessant October rains hitting 30-40% of the Indian cotton crop, we can see why cotton prices in particular rallied off of key support areas late last week and on Monday.
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When the UK’s Met Office made a long-range forecast for British and European weather in 2020, no one foresaw that its extreme 2050 heat forecast would arrive in 2022. Tuesday, the UK recorded its highest temperature ever, 40.2 degrees Centigrade (104.4 F).
Across Europe, temperature records have been broken all week. Over 2,000 people have died in Portugal and Spain alone because of heat and wildfires rage from Turkey to Spain and north to the Arctic Circle. Agriculture is suffering, with corn yields predicted to go down by 30% in Italy and 16% in Spain.
The complete social and economic damage has yet to be calculated for this summer’s wild weather in the Northern Hemisphere but the European Environment Agency estimates that the continent has lost up to $552 billion in the last forty years from extreme weather events.
At a climate summit in Berlin this week, António Guterres, the United Nations Secretary-General, declared, “We have a choice. Collective action or collective suicide.”
WIth European temperatures reaching up to 115 Fahrenheit and London thirty Fahrenheit degrees higher than average, is it any wonder the UN Secretary-General despairs?
Temperature change in Europe since 1900. Source: UNFCC.
First Cold, Now Heat: Euro Agriculture Has Taken A Big Weather Hit This Year
This is Europe’s second heatwave this year and forecasts call for more. Heat has not been the only concern for European agriculture this year, however. A record-setting cold snap in April came after higher than normal spring temperatures. Late frosts impacted almond and fruit trees in Spain and wine-growing regions in France. Impacts on grain-producing regions in Germany and other countries were small. however.
The current heat wave has led to early harvest in some soft wheat-producing areas. France’s Ministry of Agriculture forecast that 2022 soft wheat production would decline by 7.2% thanks to drought and heat. France is the largest wheat exporter in the European Union and the world’s fourth-largest.
Heat Defeats Italian Farmers, Already in a World of Climate Hurt
Minster of Agriculture Stefano Patuanelli announced last week that as much as 30% of Italian agriculture will be lost this year due to drought and heat. The government declared a heat and drought emergency in five provinces and Italy’s main farm lobby, Coldiretti, estimates that Italian farmers have lost up to US$3 billion.
The Po Valley Drought Is the Worst in 70 Years
In the Po Valley, the heartland of Italy’s rice growing area, heat and drought have decimated crops. The Po Valley includes the provinces of Lombardy, Emilia-Romagna, Friuli Venezia Giulia, and Piedmonte, some of the most productive land in the country. A farmer there estimated that up to 70% of their crops were already gone. Saline water from the sea normally reaches three miles up the Po. This year, it has intruded up to 18 miles inland, damaging crops irrigated with river water.
The Po River is seeing the worst drought in 70 years thanks to reduced winter-spring precipitation and summer heat waves. Source: SciTechDaily. Contains modified Copernicus Sentinel data (2020-22), processed by ESA, CC BY-SA 3.0 IGO.
Over 50% of Europe and UK on Drought Alert or Warnings
Yesterday, the European Commission published its report “Drought in Europe July 2022“, which found that an unprecedented 44% of land in Europe and the UK is at a drought warning stage, with 9% at the alert level. Winter-spring precipitation deficit was up to 22% more than in 2021 and this is stressing vegetation, especially in the south of the continent. Water Europe estimates that 59% of freshwater use in Europe is for agriculture, with a significant amount used to keep agriculture going in parched Southern Europe.
Water Europe also reports that annual renewable freshwater resources per inhabitant decreased across much of Europe during 1990-2017. The greatest decreases were seen in Spain (-65 %), the greenhouse for Europe, and Malta (-54 %).
In Italy, Minister Patuanelli said that the latest government research showed that Italy had lost 19% of its available water resources from 1991-2020 compared to 1921-1950. He added that the coming decades could see further decreases of up to 40%. Coldretti said that northern Italy has seen half the average rainfall for the last few years. To combat this year’s drought, water rationing has been instituted in cities across Italy.
Too Much of Europe is Burning
This summer’s heat waves have lead to record numbers of fires in forest and agriculture areas. The state of Brandenburg in Germany already has experienced over 260 wildfires this year. Forests in Southwest Europe have been hit unusually hard. Across Spain, over 70,000 hectares (173,000 acres) have burned, around twice the average area in a year. Meanwhile, a record number of hectares have burned in France for this time of year; the fire season has not hit its traditional height.
Hectares burned in France in 2022 heat waves compared to previous years. Source: Dr. Serge Zaka, Asso Infoclimat.
What Might Be Causing Europe’s Disasterous Heat and Drought?
A recent study in Nature posited that Western Europe has been a heat wave hotspot for four decades, with heat events increasing in both frequency and intensity. The study found that there was an increased frequency of and intensity when the phenomenon of the upper atmosphere’s jet stream splitting into two occurred. Heat waves would then develop between the two flanks of the jet stream, leading to the rise in European temperatures. What caused this divide was not clear to researchers.
For most of Europe, the extreme weather impacts from climate change are already easily seen, no matter what the cause. “The moment of real climate crisis is 2022,” Rudolfo Laurenti, Deputy Director of the Bonifaca Po Delta Authority, told CNN.
Jim’s latest Market to Market interview covers grain market volatility, the possible future for currently good-looking crops, impacts of the continuing La Nina that few people besides Jim saw, and how beef cow operations are suffering.
He also touches on Brazil’s possible future weather for the rest of the year versus the Midwest’s outlook. What are the odds for an early Midwest frost and what can bring great weather for Midwest farmers next year? Why are crop yields hitting trendlines despite weather problems like 2020s Midwest derecho?
Jim Roemer’s Best Weather Spider gives experienced and novice commodity traders a heads-up of how weather, technical analysis, and other fundamentals affect markets in grains, natural gas, and soft commodities.
Here for example was his advice on July 5th before the major collapse in coffee prices. The spider includes weather sentiment (both short and long-term), technical analysis, and other fundamentals in order to make investing decisions.
While coffee prices may be oversold, it will take a frost in Brazil or renewed drought later this year to set the stage for a new longer-term bull market.
So what about the Texas drought that is affecting cattle and cotton? Will a flash drought move deeper into the corn belt and stop the bleeding in the grain market?
Please email us at scott@bestweatherinc.com to receive a free grain weather spider and information about our newsletters.
38 YEARS OF EXPERIENCE ANALYZING WEATHER AND COMMODITY MARKETS FOR FARMERS AND TRADERS
Big time rains we forecasted on July 10th for much of the central and eastern corn belt, plus a stronger dollar have put pressure on the grain market, as well as big wheat crops in Australia, Russia, and Canada
Recession fears have added to the collapse in commodity prices, but here’s how the weather has also had a negative impact. Nevertheless, some new weather problems in Europe, Australia, and perhaps the western corn belt, later, needs to be monitored.
Notice how commodities such as crude oil, copper, gold, etc. have also sold off due to a stronger dollar and recession fears.
COCOA
Six/Seven years ago, we saw the last major bull market in west Africa on weather problems. Below, you can see the crop stress today vs. 2015-2016. This is one reason why the cocoa market has been under pressure for months: good growing weather in west Africa and a stronger dollar
Now, if anything, it is getting too wet in parts of Ghana where some logistical issues may be occurring for cocoa
NATURAL GAS
In addition to the aftermath of the shut-down of the Freeport natural gas (LNG) export facility in Texas, cooler weather in the eastern U.S. this past week helped to create a bearish EIA number on Thursday. This sent natural gas prices into a tailspin. Big-time heat in the Plains and western Midwest may keep prices from falling a lot further, but it is important to monitor my forecasts.
Will the east turn hot? Will there be an active hurricane season?
GRAINS
After a bullish crop report for soybeans on lower planted acreage, I advised my newsletter subscribers to consider selling way out of the money call options in corn and soybeans on these great rains the next week or so.
Will extreme heat make a comeback and “zap” crops later? Please receive a free 2-week trial to Weather Wealth to find out.
Will this extreme heat later next week be enough to hurt the U.S. corn and soybean crop?
Excellent U.S. harvest weather for wheat, plus much better rainfall and crop prospects in Canada and Russia helped me advise my clients to sell wheat for close to $13 more than a week ago. The ETF (WEAT) has collapsed by some 30% since my recommendation.
Russian spring wheat areas are in pretty good shape but a drought in Europe is reducing crop yields
Click on the video above
COFFEE
While coffee prices have tried to rally on previous dry weather worries in Brazil, tight stocks, and wet weather issues in Colombia, the weather in Vietnam has been ideal and there are no frost scares for Brazil.
Notice the big Vietnam “El Niño-inspired” droughts from 2015-2016 that helped Robusta (instant coffee) prices soar vs. much better conditions today.