The current 1 in 100 year drought occurring in one of the most important breadbaskets in the world for food production in Brazil has the potential to cause a severe and long lasting shift in the global supply/demand dynamics for grains, orange juice, sugar, livestock and coffee etc. Brazil is the number one or number two exporter in the world for most key Ag markets so what happens in Brazil will not stay in Brazil.

To add insult to injury Russia/Ukraine, a key and number one producer of wheat, is also experiencing a 1 in 50 year drought that also had an historic frost occur earlier in the year in may 2024. This is decimating wheat and corn production in the region and risks for the next crop cycle look at best precarious. Wheat feeds half the world and other than rice prevents massive starvation from proliferating. The historical precedent of past periods of weather volatility suggests the cumulatively weather becomes more volatile and amplified over time.

Our work suggests that peak weather volatility should occur between 2035-2040 before reversing. We believe that Ag prices over time will need to rerate higher to reflect this new weather volatility regime. Just in the last year orange juice and cocoa prices have reached new all time high prices at more than double prior all time highs. Currently, the coffee market is breaking out to price levels last seen back in 2010/2011 and may soon threaten the all time high prices set in 1977. Grain markets which on a relative price value basis to all other commodities and to all other Ag markets are near the cheapest they have ever been since 1948.

We believe that undervaluation in grains is unwarranted and offers a rare mispricing in this critical asset class.

To download a free sample of one of our recent reports can use the link below to our website to do just that:

https://www.hackettadvisors.com/Register_SampleReport.asp

Please take the time to watch our recent video interview with Real-vision-TV where we go over these various historical weather cycles that throughout history have created escalating climate and agricultural price volatility. We also discuss certain areas to watch over the next few years the may offer opportunities in grain markets and Soft Ag markets(coffee and sugar). 

You can watch this interview using the you-tube video link below

: https://youtube.com/watch?v=m1sf6tyD178… 

Blessings to all for health, happiness, safety and great business success.

Shawn Hackett

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