Quiet Weather Part 2: Don’t Get “Wheated”
“If you can’t spot the sucker in your first half hour at the table, then you ARE the sucker.””
Haven’t You Heard: the 2025 Russian Wheat Crop is Failing
Check out this chart that confirms the catastrophic losses…
Wheat social media experts predict 23 of last 4 rallies, miss the real ones.
Here I thought Russia was cold in the winter, and wheat grows in the spring. Hey Andy, when is Russian winter wheat vulnerable to weather?
LLMs can be developed for specific topics and data sets to control for inaccurate materials and sources. “Garbage in” = “Garbage out”
Let’s get this straight. The critical period is spring (more on this below). We are not far enough into winter to have an extended cold period, but the crop IS failing. The joys of social media-driven “analysis.”
Quiet Weather Markets
Quiet weather markets are bearish, and sustaining a bull market without ongoing weather problems is difficult. Seeds are resilient, buyers will wait, and farmers work tirelessly to minimize weather damage.
Corn futures are up 4%, and soybeans are down 3% since October. AiQ’s weather message is boring. Brazil’s 2024/25 campaign is off to the best start ever. (See Part 1: Brazil’s Monster Soybean Crop). Argentina’s drying trend may become more of a focus in the first week of January.
Not helping agriculture prices is a currency implosion in Brazil, and the US Dollar hit the highest level in over 2 years. Did we mention a trade war looms?
The Clickbait Crowd Loves Wheat
Quiet markets force analysts to find things to sensationalize. The wheat crowd is especially good at this.
Social media posts don’t start bull markets; weather does. -AiQ Axiom
“Reach out for charts” piggybacking sensational posts to sell subscriptions is peak X these days.
The opportunity for a juicy headline forces experts to forget the most famous phrase in agronomy and agriculture trading:
Wheat is a Weed
We saw this phenomenon 6 weeks earlier when Reuters jumped all over the US condition ratings as the second worst ever. The below scatter plot was included. Here is a link to the article.
Only analysts working without data and rushing out headlines were stumped.
We added the red line for clarification on the comment below.
I asked ChatGPT, “What would this scatter plot imply for a statistical correlation?”
Implications for Predictability:
The relationship between fall and spring conditions isn’t deterministic. While trends are visible, environmental factors (e.g., spring weather shocks) may disrupt the expected trajectory.
A regression analysis might reveal a moderate correlation (positive slope) but also significant variance, especially for years with extreme events.
Said in plain English: fall condition ratings lightly correlate with spring condition ratings but have a wide variance, especially in extreme years. This is why we drew the red line. Before 2024, the three worst years did not even meet the 5% losses or roughly 2 bu/ac criteria the article uses to “make its point.” 2023 had normal yields.
The takeaway for any Statistics 101 student is that 2024 is off to a poor start, but it is not meaningful.
Clickbait Crowd: Ready to “Wheat” Everyone Again
Here is the timeline for how one obscure Russian report kickstarted the “Russian wheat is worst ever and failing narrative.”
December 3, 2023
ProZerno published a sensational article on its website. (Here is the link)
Call us old-fashioned, but we read the actual articles. The second paragraph is a gem. “It has NEVER been so bad,” followed by satisfactory crops, can turn into either good or bad ones over the winter.
Crops in good or satisfactory condition totaled 62% versus 96% the year earlier, but the crops were going into the ground much later, as confirmed by yearly comparisons.
This may be concerning, but as AiQ pointed out each week since October, it was never a 2024 story once the weather improved.
December 4, 2023
Reuters runs the story with no verification and 24 hours later issues additional comments to the tune of, “We have no idea if the sensational story we published is true.”
Russian gov’t needs to fight inflation and raise taxes to pay for the war but to generate clicks; we trust some “anonymous Russian official or agency?”
Curious is a… well curious word choice in this context.
December 7, 2023
Google search trends show the rumors start to generate traffic. Search topics we chose: “Russian Inflation” (red), “Wheat Conditions” (blue), and “Russian Agriculture” (yellow).
This is the link for Google Trends, but it becomes less and less relevant with the rise of LLMs.
December 19, 2023
Expert in December begins with assumption wheat crops won’t survive.
December 19, 2023
Magically is a brilliant word applied to these posts.
Mike points out that the story isn't even true. This situation is not the worst ever, and history shows it may not be a big deal.
Back in 2018, the lowest ratings on record still resulted in the second-largest crop produced.
The clickbait crowd ignores the consequences: farmers lose money, buyers make poor decisions, and the entire industry pays the price.
Meanwhile, large speculators profit handsomely, laughing all the way to the bank.
We are not pointing this out in hindsight. I pinned this post on X because It stood out as misleading and potentially expensive to anyone who took it as sound advice.
Condition ratings were worse last yearyear and had good yields.
What’s more troubling is that this trend is on the rise because the social media algorithm rewards it. When wheat sensationalism failed to gain traction in October, the response was to double down in December.
Let’s Revisit What Happened in April
In November, I made a cheeky X post for some obvious “shot chasing” (see definition below). Just replace happiness with wheat and wheat knowledge.
The term "shot-chaser" in this context refers to someone who reacts quickly to events or stories, often in an attempt to appear informed, relevant, or "on top of things." It draws from the idea of taking a "shot" of alcohol (the initial reaction) followed by a "chaser" (an attempt to smooth over or justify the initial action). -Source (ChatGPT) - LLMs are great for stuff like this!
Weather-driven supply shocks start bull markets, often when speculators get caught positioned the wrong way. In part 1, we touched on an important factor: why so many missed the Russian weather story. They were still chasing the non-existent South American soybean failure.
In April 2024, Russia was two months into its worst drought in a decade. Groups were citing all sorts of reasons why wheat was rallying. The “experts” barely budged from their record production and record yields. See below.
16 Days is not a sample size, and this is not a statistical analysis. This is commentary that has zero predictive value.
Good winter weather somehow negates the impact of drought. You may want to check with Andy about when critical periods are. We have free trials available.
11 days later, SoveEcon lowered 1 M to 93. Still >5% above the 5-yr average and forecasting a new record production and yield (4.06 mt/ha) 2 months into the drought. 2 MONTHS!!!
Wheat rallied 25% in late April and May due to one of the driest and hottest springs on record.
Experts Miss Rally, But Try to Start the Next One
It is as if racing production numbers to the bottom or posting on social media can cause the next rally. The same people who determine what’s news (by citing each other) are trying to create the story. X sensationalizing algorithms work this way. Commodity markets do not.
October 14, we outlined the wheat situation and why it is a 2025 problem. We explain that without an imminent weather problem, buyers should take advantage as prices stabilize at lower levels. It is very straightforward, and it appears to be happening.
No sensationalism or click bait, just the weather, and information like here, here, here, or each week in our free weekly note here. We also provide reliable weekly updates like The Black Sea Brief. Ilya is a wealth of knowledge.
