There will always be debate about global warming, but on one issue there is less rain than normal in many parts of the world. The world is drier than normal, what caused it, but we can see the results around the world. While individually we may like the drier weather, the reality is for plants and the food supply around the world, there is a limited time for the plant to germinate and grow and when the weather patterns change, the plant is stressed and crop yields fall.

If you are similar to most people living in the urban areas, you are a few generations from the farm. A generation or two ago, some of your relatives likely lived and worked in the rural area on a farm which means we all have a tie to farming. If a farm is large enough, it grows a commodity-based crop which prices move up and down. If one crop is more popular, farmers switch to another to bring in more revenues. With farming there is a lot of waiting and seeing about the weather.

In an article by Naveen Thukral of Reuters, if you examine the world agriculture picture, in general global wheat, corn and soybeans prices are likely to fall after several years of gains.

According to Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Syndey, Australia, Brazil is likely to produce less corn, China is buying larger volumes of wheat and corn on the international markets. The dryness which brought large parts of Asia in 2023 is forecast to remain in 2024 putting at risk supplies of rice, wheat, palm oil.

In India, the dry weather cut production and India’s government restricted export of some rice varieties. Lack of supply, increased prices 40-40%.

India’s wheat crop is expected to shrink; however India is the world’s 2nd largest wheat consumer of wheat and domestic inventories have shrunk. It is expected India will need to buy imports of wheat.

Australia has experienced dry weather which ended a 3-year dream run of record harvest of wheat.

On the bright side, production is expected to rise in both Brazil and Argentina with abundant rail fall over the farming areas. In Argentina. the Pampas region good rains in October and 95% of corn and 75% of soybeans were in excellent conditions.

Linking to dividend paying stocks, everyday we wake up and at some point will need to eat. Most of eat wheat, corn, rice, soybeans indirectly through the foods we consume. If the weather is normal and rains fall when they should and the crops grow, then life while having its up and down is generally good. In investing, if you receive a moderate return, understanding some years will be better than others, your risk reward equation will be in balance and that is a good thing. We may not the reason for the weather being drier than normal, but you can see it how the food manufacturers try to find alternatives to maintain margins.

There are more questions than answers, till the next time – to raising questions.