There is no shortage of news that attempts to discuss the potential for disruptions to the global food supply chain, as well as the subsequent financial and social effects of such disruptions on a global scale. Most of the news which garners the headlines in the agricultural commodity sector deals with topics including low physical inventories, floods, drought, food inflation, China (and the rest of the BRICs), and supply-induced riots; weather is often, but not always, deemed one of the triggers. While the root causes of these and other related food supply stories are usually grounded in truth, what usually gets more attention turns out to be, more often than not, the sensational fallout from what truly are problems with the global food production and distribution supply chain.
Following a Weather Trends post (Wheat Weather) the other day regarding the devastating flooding across eastern Australia, we encourage readers to follow the Standard Precipitation Index (SPI) to monitor conditions in the region through January. The map below depicts the Dec2010 SPI, and it will be worth noting the changes when the Jan2011 index is released.
Index values >2 correlate with extremely wet conditions for the particular region. Droughts often are broken with an extreme pattern in the opposite direction, and while the short term ramifications to the agricultural sector in eastern Australia will see a negative impact in the current crop year, this pattern is likely to have a benefit for the following year(s) as areas that have been moisture deficient will have the ability to recharge soil moisture and groundwater.