Factors that could influence market conditions AMMO 2024

By Trista Crossley


According to Shawn Hackett, the upcoming growing season is shaping up to be hot and dry during the core, yield-determining midsummer period with the potential for a hard freeze in late spring, all thanks to the convergence of several major weather-influencing cycles.

“We could have a situation that is really off the charts unusual and could cause a stir in the marketplace,” Hackett said. “It could set up a positive cash marketing opportunity, a bright spot for producers to bring some more money home to the farm.”

And if that isn’t enough, Hackett is also forecasting an extended period of extreme weather volatility over the next decade that could further impact the world grain market.

Hackett is the founder of Hackett Financial Advisors Inc., based in South Florida, which offers financial advice to the ag industry on risk management, hedging, and indicator-based ag commodity price forecasting. He has done extensive research on long-term weather cycles to help bolster his price forecasting skills. Hackett was the presenter at the Feb. 1 Agricultural Marketing and Management Organization’s webinar, “Climate and Other Factors Impacting Ag Markets and Ag Operator Risks in the Years Ahead.”

The climate cycles Hackett is monitoring for 2024 include:

  • The rapid transition from El Niño to La Niña. 
  • A peak in the 11-year solar cycle. A complete cycle, 22 years, is called a Hale cycle.
  • The 18.6-year earth-moon-sun nutation cycle, which tracks the gravitational effects of the sun and moon on earth’s oceans and atmosphere as the earth spins and wobbles around its axis.

“Those three cycles will be driving the summer weather pattern. This is a hot, dry cycle, a drought cycle. We are not likely to have a crop year that produces trend-line yields,” he explained. “It’s possible, that if we get an alignment of everything, we will get something more sinister. That’s in the running for the next couple of years.”

How hot and dry? Hackett will be watching for when La Niña arrives and monitoring the Gulf of Alaska. If La Niña arrives before July, the potential for a severe drought increases. If the Gulf of Alaska cools into the summer, the area of the U.S. at risk for a severe drought increases. At a minimum, the northern states should expect to see drought conditions.

Other cycles that could affect market conditions in the next few years include:

  • Currency cycles. The U.S. dollar generally follows a 16-year cycle, which Hackett said is fairly reliable, and puts the next major low around 2026. A weaker dollar is more attractive to potential overseas buyers, and grain prices generally rise relative to input costs.
  • Geopolitics. This 53.5-year cycle has been tracked since the early 1800s, and the world is currently seeing an escalation with what’s happening in the Middle East and Ukraine. The next geopolitical cycle peak is in 2026, which coincides with the dollar’s trough. “These are two independent cycles that are matching up. Whatever is going on, it should continue to escalate into a big bang crescendo event. I’m not looking forward to it,” Hackett said. “I hope the cycle fails, but so far, that’s not the case. It means to us that ag commodities should see escalating inflationary risks. During such times, stockpiling becomes more in vogue, governments spend and print a lot of money to fund escalating wars, and trade flows can be quickly disrupted, which all further fan the flames of future ag commodity inflation. It’s just speculation on my part, but this is a very historically reliable variable that looks to be on the side of increasing inflationary risks on U.S. commodities.”
  • U.S. interest rates. These have followed a 30- to 35-year cycle since the early 1800s, and that cycle shows we are in for a period of overall higher interest rates. “That doesn’t mean we’ll go back to 15% like we did in the early 1980s, it just means the free money from 2010 to 2019 is gone, and we’ll see a higher cost of capital,” Hackett explained. 

Looking longer term, Hackett said we are in for 10 to 15 years of global weather volatility. Since 2003, the earth’s atmosphere has been contracting and cooling, changing the jet stream into a more undulating pattern that increases weather volatility and stagnant weather patterns, such as the atmospheric rivers that hit California this winter and last and dumped record amounts of rain and snow on the state. 

When sun activity goes quiet, it can have a destabilizing effect on the earth’s magnetic field and lead to increased volcanic events that measure 6 or more on the volcanic explosivity index, or VEI. The 2022 eruption of the underwater volcano in Tonga was a VEI of 6 and doubled the amount of water vapor in the atmosphere in about six hours. That has and will continue to create extreme heat risks for another two years before it precipitates out of the stratosphere. Hackett expects to see several more VEI events of 6 or more in the near future. 

“If you hear of a VEI 6 or 7 that just went off, you have to know that the weather is going to go psycho for the next few years,” he said.

Finally, Hackett is also monitoring surface temperatures in the Atlantic Ocean. If they start cooling, it could mean longer winters and shorter growing cycles for the U.S. He explained that the last time the Atlantic Ocean cooled was from the mid-1960s to the early-1980s, which was a very volatile time for earth’s climate, for crop production challenges, and for increased food inflation. The sun, at that time, was still showing normal activity, which makes the current quiet sun even more concerning for future food sustainability.

“We’ve been in a generally warming ocean since 1900,” he explained. “The Atlantic is just ready to turn. The solar cycle has already turned. It means we are in for a very significant change in our overall climate, temperature patterns.

A recording of the AMMO webinar featuring Hackett can be viewed at the Washington Association of Wheat Growers’ YouTube channel, youtube.com/@washingtonassociationofwhe3019.