Last week, we pointed out that a continuing North American drought was impacting the ongoing corn planting season as well as the already very underwhelming winter wheat crop.

Today, we would like to build on this theme by pointing out that, in reality, the current drought crosses the hemispheres and is impacting Southern as well as the Northern American landmass.

To get more specific, the current corn planting season in the Mato Grosso state of Brazil - one of the country's largest and most vital agriculture regions - is also ongoing and also experiencing a significant lack of precipitation.

After a historically dry April the lack of rain is continuing into May and causing rising concern about Brazil's ability to seize the opportunity that the lack of supply from Ukraine is providing.

Here is the the chart rainfall:

This trend - only developing for now - could have profound consequences for Brazilian farmers and the important Brazilian agriculture sector but it potentially has an even greater impact on global food supply:

• Alongside Canada and the USA, Brazil is one of the large agriculture exporters that could replace some of the Ukrainian and Russian supply on the global market.

It also isn't purely the American landmass that is struggling either.

Others are beginning to notice this theme - both in the US and, increasingly, elsewhere as well.

The Financial Times ran a typically excellent expose on wheat where it pointed out that there is a distinct lack of rainfall occurring in France as well.

Here is their key chart:

The threat of drought there is less advanced than in the Western US or Brazil but it is already raising red flags.

France is - surprisingly to us! - the EU's most significant wheat exporter and the world's fourth largest. Should lower yields become a reality it would mean that, shockingly, all 5 of the top global wheat exporters could be experiencing either drought or a disruptive war.

This adds further timber to the steadily growing drumbeat for real challenges to the staple grains that feed so many of the world's poor and hungry.

Aside from the moral angle and the general concern that famine would be moral stain on a world that should be able to easily feed itself, there is a financial one as well.

Many of the grain ETFs such as DBA are:

1. Outperforming the market.

2. Positive for this year.

That is rather impressive when compared with the S&P 500 down ~20% and the Nasdaq tech index down nearly ~30%. Some of the reputable grain ETFs (including DBA) have higher fees than we would normally like but they might be necessary when confronted with the stark realities of market performance in 2022.

There is a (somewhat awful) cliche that goes: "When it rains, it pours." Well, in this case, 2022 is starting to look like "when it doesn't rain, global agriculture yields fall" and somewhat counterintuitively, that is good for agriculture prices.

Another potentially positive price decline is ongoing in the nascent crypto sector.

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