Author: Michael Ferrari, PhD
VP, Applied Technology & Research
Readers here know that WTI spends a lot of time discussing the vagaries of the Indian Monsoon from both a long and short range perspective, as the seasonal pattern is crucial not only for the development of the country’s sugarcane crop, but also to the importance of the broader economic health of the nation. Most weather providers and forecasters in the weather/commodity space focus on the same areas – ie., grains/oilseeds/natural gas, with little useful information that provides advantage to the rest of the ag/soft/energy world, namely sugar, coffee, cocoa, etc… While we do provide deliverables and content which addresses the primary commodities as well, our value shows up where the masses are oftentimes not looking. It is precisely this reason that we devote so much effort to the ’secondary’ commodity markets, which often fly under the radar until a supply shock hits the market. We differentiate ourselves by providing not only the weather outlook and potential positive/negative crop impacts, but also, we frame our discussions in the context of global macroeconomic analysis. The impact of weather on sugarcane production (& ultimately on the price of sugar futures) does not mean anything as a stand alone variable – it only becomes meaningful when viewed alongside global S-D in sugar and ancillary markets, spot BR Real rates, crude prices, port availability, consumer sentiment, (etc…) among a myriad of other factors.
After India’s poor sugar crop last year due insufficient rains in key producing regions, this Monsoon season is important for trying to restore the world balance to the positive side. As such, it is timely to take a look at how we did forecasting the start of the 2010 Monsoon. The maps below show the actual June precipitation totals (in mm) on the left, and on the right is the long range Weather Trends forecast, which was developed (and which our clients had in their possession) several months ahead of the onset period.
The important thing here is to look at the numbers, not the colors. By and large, we captured the essence of the country’s monthly rainfall distribution; more importantly, when looking at the weekly breakdown, the forecast for the timing of the rains was accurate as well, as in agriculture, timing can be as important as magnitude during certain phases of the crop.
Future posts will continue to display the verification of our long range forecasts.
