History has patterns. Patterns that repeat, and rhyme.
One of them is cold weather with crop failures.
Sometimes from excess rains, sometimes from too little.
From “first principles” folks often conclude that hotter means dryer. You get that a lot from the AGW folks as they predict desertification all over as we all become more like the Sahara. This is ‘exactly wrong’, as the Sahara becomes a lush green land during those times when temperatures are just a few degrees warmer than now. MORE heat drives the heat engine faster pulling more wet air further inland, more rains, more plants grow; then begins the feedback loop of more plants retaining more moisture in the soils and shading the ground. Less ground heating, so more water goes through repeated local recycle as transpiration from plant leaves recycles into rains close to the ground. (You find that in rain forests quite a bit).
A different take on “first principles” leads folks to conclude that colder means dryer. Simple physics, they say. Cold air can not hold as much water, so less rain. They proudly point to the Sahara. They also like to ignore the history of The Little Ice Age where the crop failures were due to too much rain in the cold.
The reality is that you can not reason from “first principles” as rain is a local phenomenon. It depends on some global scale factors, on global ocean currents and on global winds and temperatures; but just as much it depends on local land forms and the relative warmth of nearby water and land. This is seen every winter as “lake effect snow” in the USA just down wind of the cold Canadian air as it blows over the relatively warm Great Lakes. Until the lakes get cold enough to freeze over, this continues. Then when the water supply shuts off, so does the snow / rain excess that depended on it.
The same thing, in reverse, is seen on the West Coast of the USA where the mountains lift the air mass and squeeze out the rain. Beyond the mountains, down wind, is a desert. From Mexico all the way to Canada. (Yes, Canada has a desert. They are quite proud of it, as I learned when I was there talking with locals.) When more water comes ashore, more is left on the mountains; deserts not so much…
So depending on where you are located you can get more rain or less rain. A hot Gulf Stream with cold arctic air and Europe gets excess rains and a Marie Antoinette Moment as French wheat fails under drenching rains. In South America a colder water flow off shore as the Antarctic waters flow along the coast of Chile means less water evaporating into the air. This means less rain in South America from the same generalized cooling that brings more rain to Europe. Basically, South America gets cold water first along with cold air and the “first principle” of cold carries less water dominates on the Chile side of the mountains. From last August we have this report on how La Niña influences Argentina:
La Niña threatens Brazil and Argentina crops says Oil World
South American grain and oilseed production may be in jeopardy from the formation of a La Niña weather pattern, which might curb rainfall in parts of Brazil and Argentina, Oil World said.
Dry weather since April in central Brazil may prevent seedlings from taking root when sowing starts in Mato Grosso, Mato Grosso do Sul and Goias states, the Hamburg-based researcher said in a report today. The weather pattern may bring rain to the area in December, too late for crops, it said.
“At the moment, sea-surface temperatures are near normal across the equatorial Pacific Ocean, but there are indications that anomalies are developing, creating La Niña conditions and probably reducing rainfall in some important oilseed- and grain- growing areas of South America,” Oil World said.
So in the popular news you will hear about the “heat” in Argentina, but not so much about the cold water that is really causing the crop failures. For that you need to go to financial and weather related news sources…
Europe gets cold air with ongoing relatively warm water (as it takes time for the Atlantic to cool) so the differential stays high: More rain from more temperature delta driving the heat engine. Argentina gets cold water providing dry air that can then stay warm as it flows over Argentina. Both have crop losses. One from excess rains, the other from lowered rains. Both caused by the turn to the cold side.
So what’s happening now? What brought on this posting?
History is rhyming again…
In Europe, wheat prices are rising during the present turn to the cold side.
What makes it a rhyme instead of a repeat? Now we have global grain trading.
French wheat prices don’t depend just on France, they depend on production in South America as well. So what’s happening in South America? Shortage of rain.
Wheat Futures Rise in Record Rally
By Rudy Ruitenberg – Jan 2, 2012 9:59 AM PT
Milling wheat futures rose for a 12th day in Paris, the longest rally for the most-active contract since the grain started trading in the French capital in 1999, amid concern dry weather will damage South American grain crops.
Parts of Argentina and south Brazil were forecast to have more dry and hot weather early this week, resulting in crop stress for corn and soybeans, AccuWeather Inc. said in a Dec. 30 report. Argentina is the world’s second-largest corn shipper after the U.S.
“The markets are again demonstrating firmness, still in a context of a very dry weather situation for the South American continent,” Agritel, a Paris-based farm adviser, wrote in a note today. “There’s little change expected in Argentina this week, with high temperatures and little or no precipitation.”
The article goes on to point at drought in Texas limiting winter wheat, and rising prices for rapeseed in Europe.
Of course, this is all couched in terms of the warmth over the land, not the cold in the waters… or the change of air flow that diverts the cold Canadian air from hitting warm gulf air over Texas. But we’ve seen this movie before. Back in the 1950s at the start of that cold cycle (after the hot ’30s and ’40s). From the wiki on drought:
Other severe drought years in the United States happened through the 1950s. These droughts began in the Southwestern United States, New Mexico and Texas during 1950 and 1951; the drought was widespread through the Central Plains, Midwest and certain Rocky Mountain States, particularly between the years 1953 and 1957, and by 1956 parts of central Nebraska reached a drought index of -7, three points below the extreme drought index. From 1950 to 1957, Texas experienced the most severe drought in recorded history. By the time the drought ended, 244 of Texas’ 254 counties had been declared federal disaster areas.
Expect to see drought in Texas cast as an artifact of global warming and ‘the worst ever’ when the reality is that it is the starting phase of a turn to the cold side and is no different from the last time this happened 60 years ago.
Later on, drought moves to the West Coast.
In the 1970s when things were cold, the Jet stream became more “loopy” too. We had cold and drought in California ( I was trying to learn to ski at Olympic Village at Squaw Valley, named as it was such a good resort the Olympic Games had been held there) and found myself trying to ski with patches of straw covering the dirt…
The big question I see is just this: How much more will this pattern continue and intensify?
Some of the best predictions we have are for a deep solar minimum for the next 20 to 30 years. That would mean a very “loopy” jet stream, extreme polar cold air, intensified circumpolar current hitting Drake Passage and sending ice cold water up the coast of South America.
For the lag time needed to cool the Atlantic, Europe ought to get excess rains and crop failure from such excess rains. South America ought to get a shortage of water and droughts. California and Texas ought to continue in water deficit as well, while the south east spends more time with rains off of the warm Gulf waters and where those collide with the “loops” of the jet stream, even stronger rains and storms.
Crop production will be challenged by both more dryness and more wet, depending on which side of the cold polar air you are on and upstream water temperatures. All just IMHO. (I’m no meteorologist and this particular bit of ‘look ahead’ would benefit greatly from someone who is actually educated and experienced at weather prediction. Anthony Watts or Joe D’Aleo for example, could undoubtedly make this much more accurate and much more correct. I think the ‘insight’ is sound, though, and that in broad terms it has gross predictive power for the economic trends.)
In many ways, this will manifest as volatility along the way. Emotional swings driving market swings. We see hints of this in a Reuters report:
EU wheat ends volatile 2011 on high note
Fri Dec 30, 2011 5:01pm GMT
By Marie Maitre
PARIS, Dec 30 (Reuters) – European wheat rose for an 11th straight session on Friday, ending on a high note a volatile year marked by adverse weather in Europe and America, a wave of Arab purchases fuelled by political unrest, the triumphant return of Russia on the grain export market and darkening economic prospects.
* On the Euronext exchange in Paris, the most traded contract, March 2012 milling wheat, added 1.25 euros, or 0.64 percent, to 195.50 euros a tonne, reaching its highest close since Sept. 21 after a rally of nearly 11 percent over the past 11 sessions.
* But the rally was not enough to make up for the heavy falls made between June and November. The January milling wheat finished the session at 202.75 euros a tonne compared with a closing level of 252.50 euros for front-month prices on the final trading day of 2010, implying a loss of nearly 25 percent.
* Volumes were again thin, prompting traders to prepare for increased volatility at the start of the new year, when market players return from their holidays.
There will be efforts by the Warmistas to paint this as a result of “Climate Chaos” or “Warming causing drought”. That is simplistic and simply wrong. It is a result of the interplay of changed air flow with changed water flows and generally colder polar conditions slowly working their way further equatorward as they compete with a decades long warmed ocean (and eventually dominate as the sun stays sleepy). As that battle plays out, grain will stay volatile and that will ripple though meat prices (that largely depend on grains for feed).
In the longer term, presuming that the solar cycle unfolds as the best estimates predict, we’re looking at more volatile spikes up, and less stable intervals of low prices in steady production. At the peak of those spikes, options will be high priced with a volatility premium as well as the base price, that is time to sell. During the good times the volatility premium will fade along with grain prices, that is the time to buy. (Figuring out the timer period of the oscillation will be important. You don’t want to hold a wasting asset for 2 years waiting or the next spike to drive prices up, so timing the trade matters and watching charts gives that timing.)
Watching grain production and looking at pattern matches to prior history will be profitable for some, and will show what is really happening with the “30 year average of weather” that the Warmistas like to pretend is climate. ( It isn’t. Climate depends on latitude, longitude, proximity to water, and land form. Not the cyclical weather patterns that can run hundreds of years in cycle length.)
On the one hand it will be gratifying to see how accurate the prediction of more crop volatility plays out; in a generally declining production on both excess rains in Europe and drought in South America / Texas.
On the other hand, if Canada and Russia get significantly colder, as they ought, just who will be picking up the slack in grain production?
Australia? They have weather cycle related water issues as well. Brisbane north getting massive excess rains from the warm water around them. The rest of the country having more cyclical patterns as the cold water flows increase near them. I need to look more at how the Indian Ocean changes temperatures and how the historical monsoon patterns correlate with loopy / flat jet streams to say ( it is an area I’ve ignored. Yet another “Dig Here!”) What I remember of the ’60s was that there were many more failures of the monsoons in India and Asia. I didn’t pay much attention to Australia then, but I think it was more volatile. There is an inland lake that has a multi-decadal cycle of refilling (and a huge flock of birds fly in to nest). I need to dig up that name again and plot that flooding cycle to the PDO cycle / Indian Ocean cycles. It is possible that Australia might be able to pick up some of the slack. But it just isn’t large enough to do it all.
I’ve added a map of La Nina water / temperature patterns. It looks like most of Australia gets more rains. So expect more grain production in Australia to dampen a bit the lower production in South America. Still needs more digging, but it’s a start.
In the end, I think we’re looking at fewer ‘good years’ and more ‘bad years’ with the ‘bad’ being both drought and flood depending on your particular place relative to the jet streams and ocean currents.
As of right now, looking at the charts on the easily traded grain ETNs (that hold contracts, not actual grain):
They are generally showing the ‘wasting asset’ behaviour and long term decline of grain prices; a long slow slide from “upper left to lower right”, so it may be that the actual supply / demand issues are not sufficient to overcome that pressure (as the options contracts lose ‘time value’ heading toward expiration). It may well be that they only respond to the fast cycle news driven events and that they are just too fast to use on long cycle weather drift over years. I’ll need to spend a bit more time looking for better instruments, I suspect.
OTOH, we are in a long slow end of a warm productive phase. This will play out over decades. It may well be that the present price blips up are just the start of a longer term rise. First volatility, then directional change to higher. These tickers will bear watching, even while looking for a better way to trade the long cycle trends.
One thing is certain: It isn’t due to “warmth” and it isn’t “chaos”. It’s just the 1950s redux at this point… One can only hope it does not turn into a start of a new Little Ice Age and a renewed “Let Them Eat Cake” moment in Europe.