Friday, January 12, 2018

La Nina weather pattern will bring some "fun" to grain markets - if volatility and a price shock is your idea of fun

There are seasonal weather patterns that will ebb and flow during the year bringing volatility to agricultural markets at regular times. However, the longer-term impact on supply can at times be limited. There is noise around production numbers but inventory can serve as a cushion.

Longer-term weather patterns like the El Nina Southern Oscillation (ENSO) can have a much greater impact and cause significant price dislocations. The weather impact may last for a full year or more. La Nina, a cooling pattern in the Pacific Ocean, has returned this winter and it can have a significant impact on agriculture markets if it continues into spring and summer. 

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