South American Drought, La Niña & the Explosion in Grain Prices

Where does weather matter most at the moment? I have my eyes glued on South America: left eye on Argentina and right eye on Brazil.

Other than strong US corn demand from China and the Midwest 2020 crop season ending with some weather problems in parts of the Corn Belt, new reports keep surfacing about the most recent Ukraine crop being lowered. Corn is the top feed grain in Ukraine.

Chinese imports of coarse grains are driven by a strong recovery in the hog sector, pushing feed demand higher. Domestic corn prices, which have been rising since February, averaged about 2,532 renminbi-per-tonne in October. This they highest price since 2014. 

Brazil is the second largest corn producer in the world, and Argentina is third. Traders are closely watching the weather in these two countries.  

Our proprietary analytic forecast system, Climate Predict, shows improvement for Argentina but drought conditions throughout much of central and parts of northern Brazil, in the next three months:

Of course, weather forecasts can change on a dime. That is why farmers, traders and novice ETF investors from all corners of the earth have been subscribing to my Weather Wealth bi-weekly newsletter at:

With respect to soybeans, China is restocking their herds and there is a tremendous demand for soybean meal. As global soybean stocks tighten, any little weather problem will set this market on fire. 

Historically, La Niña events like this result in Brazilian, and/or Argentinian, corn and soybean yields falling slightly below the trend-line. Some important rains are headed for Argentina and southern Brazil over this next week or two first, but the potential will later be there for some weather problems in South America and possibly the Midwest grain belt next summer. I am also getting concerned about central/northern Brazil for corn, soybeans, oranges and the southern coffee areas.

So, you might be asking yourself how to trade these markets… Options? Futures? ETFs?  Our newsletter’s trade strategies offer guidance and "risk vs. reward" parameters for the spectrum of "trader types"... ranging from conservative to aggressive.