Severe Drought Strains Southern United States

11 Aug

Triple-digit temperatures are spreading across the “Corn Belt” of the United States,  States with severe implications for the region’s crops and livestock.

South Dakota, Iowa, Illinois and Indiana have all been affected, and Texas in particular has faced a drought of “unprecedented” proportions.

So far, Texas has only received 40% of its normal annual rainfall, and according to climate data, the past 10 months have been the driest in over a century.

The Drought Monitor reports record-breaking levels of drought.  According to their figures, levels of “extreme” and “exceptional” drought were found in 94% of the state.  Drought has now spread throughout 92% of Oklahoma.

The conditions are serious.  Municipalities in some of the hardest-hit regions are struggling with increased power and water demands.  The total damage to crops and livestock may number in the billions. These weather conditions, which scientists are pinning to last year’s La Nina weather event, are something which we will be monitoring closely.

Episodes of drought and other extreme weather events in the United States, and the major agricultural production regions around the world, can have devastating affects on supplies and therefore major impacts on markets.

The increasing frequency of such events supports our conviction in our agriculture, water and natural resources investment thesis – we strongly believe that unfolding global macro trends make these sectors some of the most interesting investment opportunities of our time.

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