Wednesday, February 28, 2018

"As Sunspots Fade, Will Crop Yields Fall?"

We've looked at the correlation a few times, one of the posts after the jump.

From Barron's Commodities Corner, Oct. 31, 2015:
NASA predicts fewer sunspots, which may mean cooler weather, lower crop yields, and higher prices. Betting on a correlation as old as Galileo.

A decades-old government crop report, combined with the very latest data from NASA, seem to indicate that there will be poor growing conditions and lower grain yields over the next few years. As a result, traders should expect prices for wheat and corn to rise.

The report from the U.S. Department of Agriculture, published almost four decades ago, studied crop yields in the U.S. from 1866 to 1973. The paper, “Do Sunspot Cycles Affect Crop Yields?” by Virden Harrison, an agricultural economist with the commodity economics division of the USDA’s economic-research service, matched historical crop-yield data for wheat, corn, rice, and cotton with sunspot activity. And National Aeronautics and Space Administration forecasts for sunspots forming on the solar surface suggest that the sun is commencing lower activity that will last for the next five years.

THAT’S BAD NEWS FOR growers because historically fewer sunspots are associated with colder weather and lower crop yields. It has only recently become apparent that the solar cycle hit its peak last year, with the sunspot count in decline since then. “Sunspots are a proxy for the total solar effect,” says Joe D’Aleo, chief meteorologist for agriculture at Weatherbell Analytics. The activity manifests itself as more, or less, ultraviolet radiation, cosmic rays, and geomagnetic activity, all of which act as “magnifiers” to warm, or cool, the planet, he said in a 2014 white paper for INTL FCStone.

It’s worth noting that there are plenty of skeptics who would disagree as to how much alterations in solar activity affect temperatures around the globe and if there is any causation between sunspots and weather. Whether it’s a coincidence is irrelevant for investors as long as the correlation holds, which it has for some time now.

In fact, says Don Coxe, of Coxe Advisors, “It’s a coincidence that has occurred consistently since Galileo’s time.”

Broadly speaking, fewer sunspots, as NASA is projecting, mean chillier weather. That results in lower crop growth and reduced yields. “On the basis of this [forecast for fewer sunspots], we feel the chances of having the kind of growing weather we have had recently is decreasing,” Coxe adds.

HE SAYS THAT THE actual effect partly will depend on where you are on the globe. Most of the world’s grain is produced within northern climates....MORE
Back in 2009 we had:

Herschel and Me (Sunspots and Wheat)
This story at Accu-weather reminded me of William Herschel:

Herschel Takes A Picture; Endeavour Tank
As you may know, the Herschel and Planck spacecraft were launched back in May. The first images captured by Herschel have come back to Earth, and as luck would have it, they are of one of my favorite Messier Objects; M51, the Whirlpool Galaxy, in constellation Canes Venatici. Herschel took the first images using its Photodetector Array Camera and Spectrometer (PACS) instrument. Charles Messier first observed the object around 1773 and it lies about 35 million light-years away; it was the first galaxy discovered with a spiral structure. The image was taken at 70, 100 and 160 microns after Herschel's cryocover (essentially its lens cap) was opened. Herschel is the first space-based observatory to cover the entire wavelength spectrum from the far Infrared to the sub-millimeter band (60-670 micrometers)....MORE
Okay, maybe you had to be there.
Last year, at the peak of the wheat market I wrote "Wheat Market Gone Wild and "Do We All Die in 2027?":
See important note.*
During a misspent youth one of my follies was following in William Herschel's footsteps.
First, this report on prices at the Minneapolis Grain Exchange for Hard Red Spring Wheat (the good stuff)....
...And Herschel? In 1801 he announced** he had spotted a correlation between sunspots and wheat prices. Here's a mention in the Edinburgh Philosophical Journal, 1823.

The question has been argued for 200 years and Herschel has, off and on, been the subject of ridicule***. Here's a headline from the New York Times in 1903:

SUN SPOTS NO PROPHETS; Science Destroys Theories That Disasters Follow Their Appearance. Interesting as Solar Curiosities with Possible Relation to Electrical Conditions of Earth....Source
Here's the cached version
A while later I came on the scene, couldn't figure out how to make money out of Herschel's idea and having the attention span of a gnat, moved on. So why bring it up? Since I first looked at the matter there's been a lot of research and it appears the correlation may not be as spurious as I thought. The wheat price series is one of the longest we have, it extends back to 1250, I've got a paper chart that starts in 1300 (although some of the prices are dubious).

The CBOT has a wheat chart that starts in 1477.

Google Scholar has 285 ref's to Herschel and wheat prices. Gregory Yom Din of the Israel Cosmic Ray Center, Tel Aviv University and Israel Space Agency, seems particularly interested, here, here, here, and note below.

*I am not saying current wheat prices are trading off the solar cycle. La Niña, the very low carry-over and corn planting in former wheat fields is enough to account for today's prices. But looking ahead....

We seem to be in an unusual solar cycle. The start of cycle 24 has been delayed longer than usual, so we're stuck at the quiet end of 23. From NASA:...

Well, 24 finally got started, it was much weaker than the preceding three or four cycles, we're sliding into another cycle minimum but this time it might be a grand minimum along the lines of the Dalton or, hopefully not,  Maunder, and it's time to play our theme song: