Our industry 2014 - (Page 16)

  16   01 Global challenges   Environmental stress   In 2012 the US drought caused crop losses of almost US$ 23 billion. It had  direct impacts on the commodity market, with significant price spikes of grain  commodities. Commodity price evolution since May 2012 Index @ May 2012 = 100 170   Recent unexpected  weather events triggered  losses of ~130 million  tons and record crop  prices 160 150 Drought in US, Central and Eastern Europe 140 130 120 110 100 90 80 70 May-12 Wheat Jun-12 Corn Jul-12 Soybean Aug-12 Sep-12 Oct-12 Nov-12 Rice Source: CBOT/Bloomberg In addition to the impact of cyclical weather variability, which varies in intensity  and character year by year, some fundamental changes in the climatic patterns  have been observed over the last decades. The most visible ones were: 1) widespread global temperature increase, 2) change in precipitation patterns  (increased in some regions and decreased in others) and 3) change of frequency  and intensity of some extreme weather events. Fundamental changes in the patterns of temperature and precipitation could  possibly shift production seasons, pest and disease patterns, and modify   the types of crops grown in certain areas. A potential decrease in productivity  due to hotter and more variable weather may lead to more erratic production  patterns overall. Although there will be gains in some crops in some regions of  the world, the overall impact on agriculture may be negative. Simulations using greenhouse gas emissions models suggest by 2100 an  increase of global average temperature of up to 2.5°C, with more and stronger  extreme events. These changes are expected to drive a further increase in  water stress, the acidification of oceans and potentially the risk of extinction of  20-30% of assessed plant and animal species. Drought conditions   frequently observed in  regions with no water  scarcity 

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Our industry 2014

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