The Coming Grain Shortage and the Erratic Weather !

Beyond Mathematical Odds

This entire thread and most of the posts covering food security all pertain to the same “principle”, an observation I had months ago thanks to a friend.

The Year Without a Summer 2

My point with that post was not that we would experience a Year Without a Summer again (hopefully not) but rather that we would experience massive shifts in weather trends, and a drop in crop yield because of volcanic activity. The weather shift would bring increased rains, storms, and droughts. I will make a second part of the post above at some point with sole excerpts from the diaries of the ones who lived through the Year Without a Summer.

I have made a half-joke, half-serious commentary months ago, that world governments were engineering the biggest famine in human history, for what reasons, who knows, I tend to stay away from conspiracy in these posts. So we start with what should be the world's biggest concern right now. China and the state of its farming fields, and food security.

Videos of Ruined Wheat Fields in China Boost Food Security Fears

• Farmers have been cutting the crop down to sell as silage

• Reports that land is being cleared for construction projects

Videos showing acres of wheat in China being destroyed or cut down before they mature are going viral on social media, throwing doubts on the quality of the crop in some areas at a time when global prices are soaring.

The agriculture ministry is investigating to see if there’s any illegal destruction of the wheat crop, it said in a statement, citing reports that in some regions farmland is being cleared for construction projects, while in others growers are cutting the grain prematurely to sell as silage for animal feed.

Farm production is a particularly sensitive issue in China. The country strives for self-sufficiency in staple food crops such as wheat and rice, but has become the world’s biggest importer of corn and soybeans. In the last two years, the nation has also emerged as one of the top global buyers of wheat.

I have covered a few weeks ago how the severe weather in China was affecting its wheat crops, and both farmers and the State were losing a decent-sized portion of its wheat crops. “If China has a poor crop this season, then they will likely have to continue with a strong import program,” according to Whitelaw, in the article above.

And that is true now more than ever, in the Beyond Mathematical Odds series I covered China's huge appetite for grains, every single month this year they beat a record of importing specific grains, March it was corn from the US, also huge amounts of Soy, last year they bought 51% of the global grain production.

For the last 4 months, I have consistently read, from sources all over the world, mostly farmers, given the current circumstances with the global fertilizer market, lockdowns in China, supply chain, they expected Mother Nature to help their crops, and my commentary was the following. Banking food security on the whims of Mother Nature didn’t look like a good strategy at both local, national, and global levels.

China, Hong Kong Brace for Potential Record-Breaking Rainfall

Schools shut to protect children as torrential downpours threaten wheat crops and Hong Kong stock trading

Clouds and fog after rain on the upper reaches of the Pearl River in Guangxi Zhuang Autonomous Region on May 10. Photographer: CFOTO/Future Publishing/Getty Images

Given the size of infrastructure projects in China, and the ever more unreliable weather of the globe, the country faced flooding problems on its farmlands before, which severely impacted its food security, and production, ambitious in and in itself. In a year that I expected the most erratic weather in recent memory (from my PoV), this year should not be different.

Massive rainstorms lashing southern China have forced schools to close and threaten to damage wheat crops and halt stock trading in Hong Kong.

Hong Kong, Macau and Guangdong could see downpours of as much as 10 centimeters (4 inches) of rain an hour Wednesday and Thursday, with some areas potentially getting record totals of more than 50 centimeters from Tuesday through Friday, the China Meteorological Administration said. Other southern provinces from Yunnan to Fujian will also get battered. 

Heavy rain in southern regions will be adverse for the wheat crop, which is at a critical grain filling stage, according to the National Meteorological Center. Any disruption to the harvest could increase the risks for China’s overall food security. The center urged farmers to take steps to prevent fields from flooding and to harvest mature grain in time.

The precipitation is also filling reservoirs at China’s world-leading fleet of hydropower dams, which could increase electricity generation from the clean power sources and reduce coal demand, according to Morgan Stanley analysts. 

At least, partially good news, if their reservoirs indeed fill up and help the hydro generation of power, this would give a meaningful leeway towards the global price of coal, in a moment where the entire planet is shifting towards it because its cheaper profile compared to other types of fuels. Alas, we once again find ourselves in the food security aspect of it all, the current storms will affect crop yield, and after you read this entire piece, you will understand where things are headed (spoiler alert - unabated food inflation)

Very little is talked about Canadian wheat production, yet last year they had a starking loss of yield, and so did Russia (because of the weather).

Canada’s crop production plummeted in 2021, says StatCan

It wasn’t a good year to be a crop farmer and Statistics Canada has the numbers to prove it.

Production of several major field crops, except for corn, fell across the country.

Manitoba saw wheat production decrease by 28.9 per cent to 3.8 million tonnes while yields fell by 21.9 per cent to 47.9 bushels per acre, according to StatCan.

Wheat yields across Canada fell by 38.5 per cent to 21.7 million tonnes with Saskatchewan taking the brunt of crop losses, seeing their yields plummet by 43.4 per cent to 26 bushels an acre.

It was hardly a banner year for canola, which fell to the lowest levels since 2007 with a 35.4 per cent drop in production.

Canola yields across Western Canada decreased by 40.2 per cent to only 25 bushels an acre. Despite Manitoba’s harvested area increasing by 0.3 per cent to 3.4 million acres, yields fell by 28.3 per cent resulting in 29.7 bushels an acre.

View image in full screen

It wasn’t all doom and gloom, however, as StatCan says corn production increased by 3.1 per cent to 14 million tonnes despite a 1.3 per cent drop in harvested area across the country.

Canadian farmers already produce about 12 percent of the world's wheat, exporting to about 70 different countries, so this loss has a meaningful impact on the global market and will affect a good percentage of the inflation in a lot of those 70 countries that import Canadian wheat.

This lead us to India, a decent portion of the market was expecting to pick up the slack and become a massive exporter this year and in the near future. As I recently covered on my Twitter page, and in a quick post here, India has been suffering a severe heat, reaching up to 50 degrees Celsius in most parts of the country.

(while finishing this piece, this article was just published).

Soggy Fields Spur Manitoba Farmers to Swap Corn Acres for Wheat

• Shift comes as growers ‘concerned’ about seeding delays

• Province walloped by heavy rainfall, flooding in April

Farmers struggling in waterlogged parts of Canada’s Prairies are simply ditching acres of corn and soybeans for crops that are likely to fare better, like wheat and canola.

Growers are “extremely concerned” about planting delays, which is prompting the shift, Manitoba’s provincial agriculture ministry said Tuesday in a report. Soybeans and corn have to be planted earlier in the spring season or there is a risk yields will drop. Virtually nothing has been planted in the Canadian province after heavy rainfall in April saturated fields and led 26 municipalities to declare states of emergency due to flooding.

The impact of this is self-evident.

India Mulls Wheat Export Curbs in Latest Food Supply Squeeze

• Move to hurt India’s ambition to cash in on global price rally

• Government cuts output estimate after hottest March on record

India experienced its hottest March on record, shriveling India’s wheat crop during a crucial growth period.Photographer: T. Narayan/Bloomberg

India is considering restricting wheat exports as severe heat waves have damaged crops, exacerbating tight global supplies after the war in Ukraine sent food inflation soaring. 

The South Asian nation experienced its hottest March on record, shriveling the wheat crop that the world was relying on to alleviate a global shortage. To safeguard domestic supplies, the government is considering limiting wheat export

The fall in production is raising concerns for the domestic market, with millions depending on farming as their main livelihood and food source. Weaker output will hurt farmers’ incomes. The government also buys wheat for its welfare program, which provides subsidized food to two-thirds of the population.

From AP.

But it was the heat in March — the hottest in India since records first started being kept in 1901 — that stunted crops. Wheat is very sensitive to heat, especially during the final stage when its kernels mature and ripen. Indian farmers time their planting so that this stage coincides with India’s usually cooler spring.

The biggest worry of the Indian government is the same as elsewhere, inflation, and stability. If India finds itself having to choose between curbing a revolt and exporting wheat to other countries, they will choose the same other countries did back when the Ukraine war started. Protect their own food prices. Worth to note, that India experience huge farmer protests in 2020-2021, and some this year too.

Followed by

Drought and Fertilizer Spike Pinches Critical U.S. Wheat Crop

• Kansas will see some failed fields, industry group says

• Record fertilizer prices are adding to concern about shortfall

Little rain, high winds and soaring fertilizer costs mean some Kansas farmers will have “very little” wheat to harvest in a few weeks, according to a key industry group. 

“Much of southwest Kansas has gone nearly 300 days without an inch of precipitation,” Kansas Wheat, which represents growers in the state, said in a statement on Monday. “Farmers have already been in touch with their crop adjusters.”

Wheat production in the U.S. and from other big producing nations is under close scrutiny as Russia’s invasion of Ukraine upends trade flows and threatens to trigger a full-scale global food crisis as grain prices soar and nations hoard supplies.   

In Kansas, the biggest grower of U.S. hard red winter wheat, a combination of drought and “vicious” winds are hurting fields. Furthermore, high fertilizer prices have led some producers to skip full applications of nitrogen, hindering growth potential ahead of harvest that begins next month. Still, there’s time for overall crop prospects to improve, with parts of Kansas seeing some much needed rainfall last week.

The weather continues to affect the entire globe, and as I wrote about recently, the US is experiencing a hard drought, and in some places (California) a very severe one, erratic weather conditions are now also impacting the American wheat production. It isn’t summer yet, and New government maps show nearly all of the West is in drought and it's not even summer yet: "This is unprecedented" from CBS.

So, what conclusion should you get from all of the information here and previous posts focused on energy? A simple one, at least for the foreseeable future the graph below will continue getting “red”.

That is the Consumer Price Index (CPI) month to month and year to year, the cost of food, goods, fuel, and services. At the very least the price of food will keep going higher, and when loss of yield at a global level is apparent, it will keep pressuring inflation up. Let alone talk about food security in poorer countries, that will experience unrest, and revolts like Sri Lanka, Peru, and Iran recently.

What can you do? Buy some wheat flour buy some grains, and store them inside mylar bags, or inside big tubs with Oxygen eaters. At the very least you will beat inflation, and save money, I bought 60 pounds of wheat flour 3 months ago, and it is already 3x the price. You are saving money, which you can use to buy other things down the line.

Food inflation will remain high for the foreseeable future, and you should prepare and budget accordingly. The goal of my analysis is to make you aware of everything going down, how connected everything is, and the dynamics of it all. Don’t let emotion cloud your judgment, or how you consume information.

If you must read all my other pieces with the title of Beyond Mathematical Odds, or the opinion pieces. That will give you the broader picture.

Deep appreciation for all the supporters!