DES MOINES, Iowa — Concerns about dryness in the United States Midwest have driven up crop prices in Canadian and international markets, yet few people actually believe that a severe drought is about to hit the region.
For that matter few traders express a belief that wild weather will ravage crops anywhere. Most talk about being confident that the world’s farmers will experience normal weather, even if some isolated crops see market declines.
But that’s not a safe way to think, said Iowa State University weather analyst and crop production expert Elwynn Taylor.
The kind of weather most people consider to be “normal” is really just one half of a two-part cycle, he said, and the dangerous second part is set to begin soon.
“What we know is we’re ending a period of stability and going into a period of volatility,” Taylor said during a recent weather outlook session.
“We expect to be in a period of volatility for the next 20 to 25 years.”
Taylor said the past two decades have seen tame swings in weather patterns and have produced generally rising corn and soybean yields in the U.S. Midwest. That predictable trend is likely to end this year or next year, ushering in an age of huge swings in yields.
Taylor’s predictions, if they come true, would have major implications for crop markets around the world because Midwest U.S. prices have a big impact on world prices. World vegetable oil crop prices, including Canadian canola, take their lead from U.S. soybean prices, and world feedgrain prices, including Canadian oats and barley, closely follow the path that U.S. corn takes.
Taylor claims that centuries of weather evidence, including corn yields for more than a century and tree ring data for 800 years, shows a pattern of interchanging periods of volatility and stability. In a period like the 1980s, droughts and other major weather events wreak havoc on crop production, leading to wild swings in crop prices.
Weather conditions are generally benign year after year in a period like the late 1990s to the present, allowing crops to come close to their potential in most years.
He doesn’t know what causes the pattern of periods switching between volatile and stable, but he is convinced that the long, stable period that most farmers and consumers have become accustomed to is ending.
He is also sure that the kind of unpredictable weather and crop production that characterized the 1980s is coming back.
“About now,” Taylor said.