Corn cob grows in an agricultural field in Canada. Photographer: Shannon VanRaes/Bloomberg
As if 2020 wasn’t bad enough, 2021 will likely bring biblical-style extreme weather including droughts, frigid winters, and monster hurricanes, recent research shows.
While bad weather may not be something to wish for, savvy traders should be able to make some money as prices for food stuffs such as wheat, corn and coffee, jump as the inclement weather destroys crops and reduces yields, the report from Hackett Financial forecasts.
The Sun and La Nina to Send Weather Wild
“The prime reasoning for this bullish orientation is our forecast for an escalation of wild weather volatility and extremes as a major La Nina aligns with the first Grand solar cycle minimum in over 200 years,” the Hackett report states.
Solar minimums are often associated with cooler weather and Grand solar minimums tend to be severe. One grand minimum resulted in London’s river Thames freezing over. With the new solar minimum we should expect similarly brutal weather.
At the same time, the La Nina weather system, which typically brings drier winds, will add to the malaise and cause droughts, the Hackett report predicts.
Drought Ahead for Key Food Producing Areas
“[We have confidence there will be] major drought cycles to escalate in the U.S., Eastern Europe, South America and western Russia,” the report says.
On top of the drought and harsh cold winter weather, there’s another piece of bad news for farmers. The oceans will now likely start to cool following a forty year period of warming. In turn, that ocean cooling will lead to lower air temperatures.
Again, this is going to hurt crops across the globe, reducing yields and sending prices for grains and other agricultural products higher.
It could happen as soon as the fall of 2021 and last initially through to the spring of 2022, the Hackett report says.
“We feel this weather event will have a much greater impact on Ag[ricultural] supplies and prices than the droughts will,” states.
Get Ready for Higher Grain Prices
Or put simply, a longer brutal winter less than a year from now will lead to higher prices for grains and other products.
Investors interested in profiting from the likely rally should consider buying exchange-traded funds that specialize in holding grain futures contracts. These include the Teucrium corn (CORN), Teucrium Wheat (WEAT)
