We are not out of the woods yet regarding high food and energy prices.
An epic volcanic eruption in the Pacific in mid January last year is likely to keep causing havoc for the planet.
The Tonga undersea volcano unleashed staggering power, the equivalent of up to 18 mega tons of TNT, according to experts at NASA. That’s multiple times the size of the nuclear bombs dropped on Nagasaki and Hiroshima at the end of WWII.
While that was a year ago the impact on the climate is likely to linger and that could have a profound impact on crops this year, experts say.
The problem is that the blast emitted 50 million metric tons of water vapor into the atmosphere, an increase of about 5%. In turn, that’s likely to mess with the climate.
The Tonga vapor is also the reason for “wild temperature volatility from record cold to record hot in weeks,” states Shawn Hackett in his Hackett Money Flow
- “We can expect hot weather extremes this summer in the northern hemisphere as water vapor traps heat from escaping. Tonga will be impacting our climate for another few years before the water vapor dissipates.”
Extreme weather, hot or cold is often bad news for crop yields, which in turn leads to higher food prices. These extremes also impact the price of energy such as natural gas. In frigid winters natural gas prices tend to rise as people require more heat. But baking summers also require more energy for cooling.
While that may sound like bad news for consumers, savvy investors could offset some of the additional costs by investing in natural gas futures contracts, or natural gas producers such as Chesapeake Energy
Alternatively try purchasing one of the many food-related exchange-traded funds that track grain prices. These include The Teucrium Wheat Fund (WEAT
As always, these trades can be risky, mostly because forecasting the weather with accuracy is beyond tricky. Put another way, the weather may not turn out as extreme as expected in either the summer or winter.