Geospatial data is any object or information that has a location on the Earth’s surface. Most data that is related to climate, agriculture, and food security has some element of geospatial information, whether that is information spread across space and time, or at specific locations (points) for a specific window of time.

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Leverage Gro's geospatial data to

A global, up-to-date layer of all cities, districts, provinces, countries, and continents with administrative boundaries

Very powerful for searching and defining regional calculations quickly

Observed or modeled weather variables including precipitation, temperature, evapotranspiration

Also variables like Soil moisture, vegetative health , NDVI Water bodies

Three major features set Gro's geospatial data apart

The Gro platform leverages our geospatial data to enable better and faster decision making.&nbsp;For example, Gro’s Climate Risk Navigator for Agriculture (CRN) gives users a detailed look at cultivated agricultural areas, providing information on where specific crops are grown. Users can change crop weights within the application and it allows you to look at climate variables and indices weighted by the land area designated for specific crops.

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La Niña’s forecasted departure in the next couple of months should deliver good news in the short run for Southeast Asia palm oil production. But starting early next year, palm yields could suffer from the drier conditions that typically follow La Niña’s exit, and this could weigh on production in 2024 and beyond.&nbsp;In addition, the potential onset later this year of El Niño, which generally brings abnormally dry conditions to Indonesia and Malaysia, could exacerbate a downturn in palm production next year, according to a Gro analysis of past La Niña and El Niño transitions. As the two countries together account for 85% of <a href="https://app.gro-intelligence.com/displays/NdVMw6j9v" target="_blank" rel="noopener noreferrer">world palm oil supplies</a>, the change in climate conditions could prompt renewed volatility in palm oil prices later this year.&nbsp;Palm oil prices have dropped by more than 40% since reaching an all-time peak in May 2022, in the wake of Russia’s invasion of Ukraine, but prices lately have been subdued. Available global supplies are plentiful amid weaker than expected demand. Meanwhile, abundant rainfall, due to La Niña, looks to boost production for the remainder of 2023.After three consecutive years of La Niña, the US Climate Prediction Center (CPC) forecasts a high probability that the global climate pattern will soon end and be replaced by “<a href="https://app.gro-intelligence.com/displays/adGQp0yRZ" target="_blank" rel="noopener noreferrer">ENSO neutral</a>” conditions.&nbsp;In its latest monthly forecast, the CPC also increased the chances that El Niño conditions could prevail starting later this year. The agency assigns a nearly 50% chance of El Niño beginning in the June through August period and a greater than 60% chance between September and November. El Niño and La Niña trends are just one factor influencing local climate conditions and don’t ensure specific weather patterns.&nbsp;It typically takes six to nine months for a change in prevailing climate conditions to manifest in palm oil yields. Thus, for the remainder of 2023, Indonesia and Malaysia palm yields should continue to benefit from the recent heavy rains. And as sodden fields begin to dry in the coming months, harvesting should accelerate as workers have an easier time accessing the palm groves.&nbsp;This delayed pattern was seen during the La Niña event that began mid-2007. From the start of 2008, and for the next nine months, Malaysia’s palm oil production increased on average about 15% per month compared with the previous year. After that La Niña event ended in mid-2008, replaced by ENSO neutral conditions, monthly production starting later that year fell 5% on average into early 2009. (See graph below.)&nbsp;&nbsp;<figure class="image"><img src="https://res.cloudinary.com/gro-intelligence/image/upload/v1676499570/new-website/La_Nina_and_Palm_Oil_Production_fb6156a8f9.png"><figcaption>La Niña tends to bring above-normal precipitation to Indonesia and Malaysia, resulting in a boost to palm fruit yields typically six to nine months later. The chart above shows a previous La Niña event that began in mid-2007 was followed by higher Malaysian palm oil production starting in early 2008.</figcaption></figure> El Niño can bring the opposite effect. The El Niño event that ended in the first half of 2016 brought below-normal precipitation, and later that year it ushered in a period of declining production. Overall, Malaysia saw a 13% drop in production for all of 2016 in part due to the impact of El Niño, which brought abnormally dry conditions for the first half of the year. (See graph at bottom.)&nbsp;Rainfall amounts during ENSO neutral conditions, when neither La Niña or El Niño are in effect, tend to be mixed. Palm trees require plenty of water to thrive and with the forecasted transition to ENSO neutral in the next month or two, the abundant soil moisture in Indonesia and Malaysia plantations could be depleted rapidly. In addition, the tropical climate’s high evapotranspiration rates could also hasten a reduction of soil moisture.&nbsp;<a href="https://hub.gro-intelligence.com/plot-region/agriculture/1123,Malaysia:1095,Indonesia$%7B%22checked%22%3A%5B%22OilPalm%22%5D%2C%22method%22%3A%22sum%22%7D_0?0,World:12,Asia:1123,Malaysia" target="_blank" rel="noopener noreferrer">This display</a> in Gro’s Climate Risk Navigator for Agriculture shows that current soil moisture readings, weighted for oil palm growing areas of Indonesia and Malaysia, are at their highest levels in more than a decade. The Navigator app can be used to monitor precipitation, temperature, soil moisture, and other growing conditions in near real time in the region as the impact of La Niña fades.&nbsp;In addition to palm oil, the forecasted end to La Niña could have profound effects on food production around the world, including possible relief to some drought-stricken corn and soybean growing regions in South America and to the winter wheat belt of the US Great Plains, as Gro wrote about <a href="https://gro-intelligence.com/insights/la-nina-s-departure-seen-having-major-impacts-on-global-food-production" target="_blank" rel="noopener noreferrer">here</a>.&nbsp;<figure class="image"><img src="https://res.cloudinary.com/gro-intelligence/image/upload/v1676499617/new-website/El_Nino_and_Palm_Oil_Production_b3b0b947e9.png"><figcaption>El Niño can have the opposite effect to La Niña, bringing below-normal precipitation to palm plantations in Indonesia and Malaysia. The chart above shows a previous El Niño event that ended in 2016, which brought drought-like conditions to the region. In 2016, Malaysian palm oil production dropped 13% from the year earlier due in part to El Niño.</figcaption></figure>

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As La Niña Exits, Palm Oil Production Could Rise in 2023 but Drop in 2024

After three consecutive years, La Niña’s forecasted departure in coming weeks could have profound effects on food production in some of the world’s major breadbasket regions.&nbsp;An end to the <a href="https://app.gro-intelligence.com/displays/adGQxzxRZ" target="_blank" rel="noopener noreferrer">global climate event</a> could bring relief to some drought-stricken corn and soybean growing regions in South America and to the winter wheat belt of the US Great Plains, according to a Gro analysis of past La Niña and El Niño transitions. However, it could also close out successive years of bumper harvests of palm oil in Indonesia and wheat in Australia.&nbsp;The US Climate Prediction Center (CPC) forecasts an 82% chance that La Niña will exit between March and May, transitioning climate conditions to an “ENSO neutral” state.&nbsp;After that, the CPC currently forecasts a 51% chance that El Niño conditions will prevail beginning in the August-October period, a development that could further impact global food production. El Niño and La Niña trends are just one factor influencing local climate conditions and don’t ensure specific weather patterns.&nbsp;For some crops currently in the ground, La Niña’s departure will come too late. Argentina’s current corn and soybean crops have endured the worst drought in 20 years, stunting yields, as Gro wrote about<a href="https://gro-intelligence.com/insights/argentina-headed-for-deep-soybean-decline-brazil-a-record-crop-gro-predicts" target="_blank" rel="noopener noreferrer"> here</a>. And Gro Drought Index readings for the US winter wheat crop are close to a two-decade high, as shown in this display from <a href="https://hub.gro-intelligence.com/plot-region/agriculture/1215,United%20States$%7B%22checked%22%3A%5B%22NASS%20Winter%20Wheat%20(US%20only)%22%5D%2C%22method%22%3A%22sum%22%7D_0?0,World:15,North%20America:1215,United%20States" target="_blank" rel="noopener noreferrer">Gro’s Climate Risk Navigator for Agriculture</a>. US winter wheat crop yields have <a href="https://app.gro-intelligence.com/displays/gRnoeY59Y" target="_blank" rel="noopener noreferrer">declined </a>for four straight years.However, Brazil’s second corn crop, which accounts for some 70% of Brazil’s total corn production, could get a boost from La Niña’s exit. The second crop, known as safrinha, is currently being planted in areas that have benefited from ample rainfall of late, and a neutral ENSO signal could reduce the chance of drought in the coming months.Successive years of La Niña brought dry conditions for Brazil’s soybean crop, the biggest in the world. Drought levels in 2020, 2021, and 2022 were among the highest in the past 20 years, as shown by the <a href="https://hub.gro-intelligence.com/plot-region/agriculture/1029,Brazil$%7B%22checked%22%3A%5B%22Soybeans%22%5D%2C%22method%22%3A%22sum%22%7D_0?0,World:16,South%20America:1029,Brazil" target="_blank" rel="noopener noreferrer">Gro Drought Index</a> weighted for Brazil’s soybean growing areas using Gro’s Climate Risk Navigator for Agriculture. That depressed Brazil’s soybean yields, mainly in the country’s south, and nationwide yields fell by double-digits in the 2022/23 crop year.&nbsp;A possible El Niño later this year could change Brazil’s precipitation patterns and affect soybean yields. The 2009 El Niño event brought normal-to-above-normal rainfall and Brazil soybean yields rose. But the 2015 El Niño resulted in heavy rain in the country’s southeast and dry conditions elsewhere, which depressed soybean yields for the 2016/17 season.&nbsp;La Niña’s passing could help US winter wheat crops during the 2023/24 year. Mostly ENSO neutral conditions in 2018 and 2019 brought above-normal precipitation to at least parts of the Great Plains. And 2015’s El Niño resulted in soil moisture levels that were normal or above normal, as shown in this Gro Climate Risk Navigator <a href="https://hub.gro-intelligence.com/plot-region/agriculture/1215,United%20States$%7B%22checked%22%3A%5B%22NASS%20Winter%20Wheat%20(US%20only)%22%5D%2C%22method%22%3A%22sum%22%7D_0?0,World:15,North%20America:1215,United%20States" target="_blank" rel="noopener noreferrer">display</a>.&nbsp;On the other hand, La Niña’s departure could result in lower crop yields in other parts of the world, including Indonesia and Malaysia, the top two palm oil producers. If drier conditions emerge under ENSO neutral or El Niño conditions, palm oil output would be at risk in 2024 after benefiting from multiple years of ample rainfall stemming from La Niña, as Gro wrote about<a href="https://gro-intelligence.com/insights/la-nina-s-return-points-to-higher-palm-oil-production-in-2023" target="_blank" rel="noopener noreferrer"> here</a>.&nbsp;Indonesia and Malaysia saw palm oil yields fall sharply in 2015/16 in the wake of the 2015 El Niño, as shown in <a href="https://app.gro-intelligence.com/displays/K9pxe5A9E" target="_blank" rel="noopener noreferrer">this Gro display</a>. Even mostly ENSO neutral conditions in 2019 brought drought to the two countries’ palm growing regions.&nbsp;Australia’s <a href="https://app.gro-intelligence.com/displays/eRJDzMadV" target="_blank" rel="noopener noreferrer">wheat crop</a> also has benefited from La Niña-induced rainfall in recent years, with production rising each year since 2020/21. Although Australia should harvest another bumper crop this year, excessive rainfall is expected to reduce grain quality and decrease how much milling wheat is available versus animal feed grain, as Gro wrote about <a href="https://gro-intelligence.com/insights/heavy-rains-put-australia-s-wheat-crop-at-risk" target="_blank" rel="noopener noreferrer">here</a>.&nbsp;Past episodes of El Niño brought drier conditions to Australia’s wheat fields, but the impact on crops was mixed. Wheat yields fell following 2009’s El Niño but were little changed in the wake of the 2015 event.

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La Niña’s Departure Seen Having Major Impacts on Global Food Production

A year ago we at Gro saw the likelihood that climate policy would be driven mainly by financial regulators in Europe and the US, with the potential that elevated energy and agricultural prices, as well as the US midterm elections, could impact the energy transition on both sides of the Atlantic.&nbsp;In 2022, <a href="https://gro-intelligence.com/insights/gro-s-climate-policy-forecasts-for-2022-how-did-we-do?utm_campaign=Gro%20Daily%20Notes&amp;utm_medium=email&amp;_hsmi=241165711&amp;_hsenc=p2ANqtz-8kljZh3TBUZJQY0vOPi4JSJ24CCZM7J9SC7t0LwtEtmX3d24aKfVzCwCB40u7oU5NGnIbNNxGaFTzpqvgJyCRT1opPCziL2bWasi0hYovsROju1ao&amp;utm_content=241165711&amp;utm_source=hs_email" target="_blank" rel="noopener noreferrer">we saw all of that</a>, but also unanticipated impacts from the Russian invasion of Ukraine, a fresh surge in energy costs, and a plethora of extreme weather events that cost human life and disrupted economies worldwide.&nbsp;Looking ahead, Gro sees the following core themes for the coming year:Increased focus on adaptation and physical climate risks:<ul><li>Gro continues to see a growing need for leaders in finance, government, and business to understand — and begin adapting to — the physical risk that a warming climate is already bringing with it.</li><li>This year, as in 2022, developments in climate policy will increasingly force such risk assessments to occur. But more than ever before, so too will the business impact of climate-driven weather events on markets and supply chains around the world.</li></ul>Europe continuing to drive global progress in 2023 on:&nbsp;<ul><li>Green investing&nbsp;</li><li>Deforestation-free marketplaces, and</li><li>Sustainability and climate-related risk disclosure</li></ul>Slowed progress in the US:&nbsp;&nbsp;<ul><li>A new Republican majority in the House of Representatives will likely add to the headwinds that have stalled federal climate policy aimed at reducing US emissions.</li><li>And while the Securities and Exchange Commission is expected to finalize new climate-risk disclosure rules by May, the proposed rules are likely to face legal challenges brought by various state attorneys general.&nbsp;</li></ul>At Gro, we have the data and analytics to help financial institutions, governments, and corporate risk managers identify, address, and adapt to a warming climate and its many effects. Contact a member of our team to <a href="https://info.gro-intelligence.com/schedule-a-demo" target="_blank" rel="noopener noreferrer">learn more</a>.Here are the Top 3 climate risk developments that Gro will be watching in 2023:&nbsp;Europe Will (Continue to) Drive Global ProgressIn pursuit of climate goals enshrined variously in law and binding policy across the EU, European regulators have steadily rolled out a series of proposed and final regulations that Gro expects will begin to drive real change in the EU marketplace — and beyond — starting in 2023.&nbsp;&nbsp;Green investing: In reaction to the finalization of the <a href="https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en" target="_blank" rel="noopener noreferrer">EU Taxonomy for Sustainable Activities</a> regulation in mid-2020, funds with assets on the order of US$140 billion have been voluntarily reclassified — mostly downgraded — in regard to marketing claims of environmental, social, governance (ESG) investment practices. (Most recently, Banque Pictet &amp; Cie downgraded funds worth US$14 billion from Article 9 to lower-tier Article 8 status.)&nbsp;<ul style="list-style-type:disc;"><li>Look for that reclassification trend to continue, and perhaps accelerate, in the coming year as the Taxonomy expands past climate-related issues to cover additional sustainability subjects — including water and marine resources use and protection; pollution prevention and control; and biodiversity and ecosystems protection.</li></ul>Deforestation-free marketplace: Newly agreed upon <a href="https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7444" target="_blank" rel="noopener noreferrer">anti-deforestation rules</a> are expected to come into effect in the EU in the second quarter of 2023. The rules will require larger European companies selling “palm oil, cattle, soy, coffee, cocoa, and timber, as well as derived products, such as beef, chocolate, furniture, charcoal, and printed paper products” to certify — starting in 2024 — that their products are (a) “deforestation-free,” meaning they are produced on land that was not subject to deforestation or forest degradation after Dec. 31, 2020; and (b) compliant with all relevant applicable laws in force in the country of production, including human rights and Indigenous peoples’ rights laws.&nbsp;&nbsp;<ul style="list-style-type:disc;"><li>We expect this year will be one of meaningful action from companies subject to these rules aimed at understanding the extent of deforestation impacts in their supply chains.</li></ul>Sustainability and climate-related risk disclosure: In June, shortly after the anti-deforestation rules are expected to be finalized, we expect the new <a href="https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en" target="_blank" rel="noopener noreferrer">European Sustainability Reporting Standards</a> (ESRS) to also be finalized. The rules will require some of the most extensive and detailed corporate sustainability-risk and impact reporting in the world.&nbsp;<ul><li>The rules set 2024 as the first required reporting year, and Gro expects 2023 will see a significant amount of preparatory activity across all large and most listed EU companies, large EU subsidiaries of non-EU parents, and non-EU companies with a turnover in the EU of more than 150 million euros.</li></ul>Disclosure of carbon embedded in imports: The EU’s <a href="https://taxation-customs.ec.europa.eu/green-taxation-0/carbon-border-adjustment-mechanism_en#:~:text=The%20EU's%20Carbon%20Border%20Adjustment,production%20in%20non%2DEU%20countries." target="_blank" rel="noopener noreferrer">Carbon Border Adjustment Mechanism</a> (CBAM) is expected to be finalized in October 2023, with 2024 primed to be the first reporting year and 2026 as the first financial compliance year. The CBAM will initially require EU importers of iron and steel, cement, fertilizers, aluminum, electricity, and hydrogen to report the amount of carbon embedded in the products they import for sale in Europe. Starting in 2026, carbon-based fees will be imposed on such imports to “level the playing field” between EU businesses and those outside the EU that are not subject to the <a href="https://climate.ec.europa.eu/eu-action/eu-emissions-trading-system-eu-ets_en#:~:text=The%20EU%20ETS%20is%20a,and%20remains%20the%20biggest%20one." target="_blank" rel="noopener noreferrer">European Emissions Trading</a> (ETS) scheme.<ul><li>As with the ESRS, Gro expects 2023 to be a year of active preparation for companies subject to the CBAM and their non-EU suppliers in anticipation of mandatory embedded carbon reporting starting in 2024.</li></ul>Taken as a whole, 2023 is poised to be the year when sustainability becomes a material concern for corporate risk managers across Europe — the year the “rubber meets the road” for non-financial corporate risk assessment and disclosure in the EU. Importantly, due to their scope and breadth, these expected, first-mover European developments have the potential to drive spillover effects globally, forcing companies around the world that trade with the EU to conduct assessments and helping to shape the climate risk reporting ecosystem, as well as future national disclosure frameworks, worldwide.&nbsp;US Climate Progress Stalled by PartisanshipThe fallout from last year’s politics in the US threatens to maintain — and likely to increase the strength of — the headwinds that have been keeping federal climate policy aimed at reducing US emissions stalled. The November 2022 midterm elections put the House of Representatives under the control of a fractured Republican Party that has stymied climate action and ESG investing standards generally, and specifically the US Securities and Exchange Commission’s (SEC) proposed climate-related financial disclosure rules. Meanwhile, President Biden’s ability to exercise executive action on climate initiatives has been newly limited as a result of the US Supreme Court’s decision in <a href="https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf" target="_blank" rel="noopener noreferrer">West Virginia v. EPA, No. 20-1530</a>.<ul><li>As Congress gets back to business, Gro expects the House will work to frustrate Biden administration climate initiatives, including implementation of the US$700 billion Inflation Reduction Act (IRA) of 2022, one of the administration’s marquee accomplishments.&nbsp;</li><li>We also expect House Republicans to try to slow the spread of climate and ESG investing on Wall Street by prosecuting a <a href="https://judiciary.house.gov/media/in-the-news/republicans-launch-antitrust-investigation-climate-obsessed-corporate-cartel" target="_blank" rel="noopener noreferrer">recently announced investigation</a> into whether major climate groups that spearhead the ESG investing movement are violating antitrust laws.</li></ul>Outside of Congress, it is expected that the SEC will, sometime this year, finalize new climate-risk disclosure rules largely consistent with, but almost certainly somewhat reduced from, those proposed in draft form last March.&nbsp;<ul><li>Republican state attorneys general can be counted on to quickly launch a legal challenge to the SEC rules. In a <a href="https://www.sec.gov/comments/climate-disclosure/cll12-8915606-244835.pdf" target="_blank" rel="noopener noreferrer">letter to the SEC last summer</a>, 24 attorneys general, most of whom are still in office, previewed what appears to be their planned legal attack that includes the winning argument from last year’s West Virginia v. EPA Supreme Court case.&nbsp;</li><li>We also expect that if such a challenge is filed in court, a stay pending decision, which would prevent implementation of the rule, will be requested and likely granted.</li></ul>Proactive Adaptation to “Baked-in” Climate ChangeAs we highlighted in our Climate Watchlist last year, the Earth currently appears to be on an emissions trajectory where, despite steady emissions-reduction progress in Europe, global average temperatures will exceed 2°C above pre-industrial levels by 2100. And even if we were to bend the trajectory curve substantially in the coming decade, the next 30 years of expected climate change will remain largely unchanged as emissions already in the atmosphere will drive them. As a result, extreme weather events are expected to increasingly underscore the business risk of climate change — the need for businesses to seriously engage in climate adaptation — regardless of related policy or regulations.In 2022, the world experienced a series of off-the-charts extreme weather events: record European heat and drought; sustained drought that suggested the “desertification” of the US West (with record low water levels in Hoover Dam’s Lake Mead); economy-disrupting record low river levels in Europe and for the Mississippi; catastrophic flooding in Pakistan; and Hurricane Ian in Florida, which is tied as the fifth-strongest hurricane on record to make landfall in the contiguous United States.What level of climate change-driven impact we’ll see in 2023 is difficult to forecast. But preparing for at least a similar level of impacts as we saw last year seems prudent, as the occurrence of global weather disasters has trended higher in this century — in the past five years the world has averaged 2.4 mega-disasters (those costing US$20 billion or more) annually, up from 1.6 such events on average for the five years before that.Climate adaptation will therefore be central to operational risk management across all enterprises. This adaptation, in order to be financially feasible, will require climate intelligence that is local, probabilistic, and based on commonly understood and utilized scenario projections. It will also need to be communicated both to meet coming regulatory requirements and to provide guidance and comfort to investors and other stakeholders. Accordingly, investors will need new and better tools to independently access the physical risk profile of their investments as well as the suitability of those investments’ asset protections and adaptations.

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3 Forces Shaping Global Climate Risk in the Year Ahead: Gro’s 2023 Watchlist

At the start of 2022, Gro put together a Watchlist with our predictions for a handful of major themes in climate policy for the year just ended.&nbsp;Today, Gro is looking back at those forecasts to see what we got right and where we missed the mark during a year in which climate policy was impacted by extreme weather disruptions, armed conflict in Europe’s breadbasket, and high-stakes midterm elections in the US.&nbsp;&nbsp;Next week we will publish our Watchlist for 2023, with new forecasts for climate policy&nbsp; likely to drive ESG investing markets, corporate sustainability accounting and disclosure, and more in the year ahead.&nbsp;Driven both by policy and by climate-related impacts increasing in frequency and intensity, climate risk is now recognized as a business and financial risk. At Gro, we have the data and analytics to help financial institutions, governments, and corporate risk managers identify, address, and adapt to a warming climate and its many effects.&nbsp;Here’s how Gro’s forecasts for climate policy panned out for 2022:&nbsp;US Climate Policy to Face Headwinds ✓What we forecast: A continuation of the overall status quo for climate policy in the US, the world’s second-largest emitter by volume of greenhouse gas driven by:<ul><li>A likely curtailment by the Supreme Court of the EPA’s authority to regulate CO2</li><li>The likelihood that Republicans would gain control of at least one house of Congress in the 2022 midterm elections</li><li>Very little chance that “any strong new climate laws will be enacted.”</li></ul>What we got right: While the Biden administration has made significant progress in its two-year effort to execute a climate U-turn from where the Trump administration left off, US climate policy overall remains about where it was a year ago. The Supreme Court ruled against the EPA in West Virginia v. EPA, No. 20-1530, giving new life to an arcane, agency-limiting legal argument that has already been asserted against draft climate-risk disclosure rules proposed by the SEC. And with a new Republican majority in the House of Representatives, agency-led climate action will become even more difficult to execute.What surprised us: A year ago, the likelihood of any major congressional action in 2022 — a high-stakes midterm election year — seemed very small, after Sen. Joe Manchin (D-W.Va.), citing the bill’s climate-related energy provisions, sided with Senate Republicans to kill the Biden administration’s Build Back Better Act. But over the summer, he and Senate Majority Leader Chuck Schumer engaged in surprise, secret negotiations that resulted in the proposal, and passage, of the US$700+ billion Inflation Reduction Act (IRA) of 2022. With no emissions-limiting mandates or regulations, the IRA is not a strong new climate law, but it has the potential to help incentivize clean energy and climate-related investments at the scale that will be needed to approach the Biden administration’s ambitious <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet-president-biden-sets-2030-greenhouse-gas-pollution-reduction-target-aimed-at-creating-good-paying-union-jobs-and-securing-u-s-leadership-on-clean-energy-technologies/" target="_blank" rel="noopener noreferrer">2030 climate goals</a>.Mandatory Disclosure Will Drive Progress on Pricing Climate Risk ✓What we forecast: Looking ahead in Europe, and seeing likely legislative headwinds in the US, Gro anticipated that financial service regulators would continue to be the primary drivers of change in the climate risk assessment space.&nbsp;What we got right: 2022 was a big year, particularly in the EU, for corporate climate risk disclosure, pushing climate risk assessment to the forefront of active corporate governance. The EU issued the world’s most comprehensive and detailed corporate disclosure rules regarding ESG and climate-related risk in May 2022, the European Sustainability Reporting Standards (ESRS).&nbsp;This came on the heels of a landmark proposal in March by the US Securities and Exchange Commission (SEC) to require registered companies to disclose their climate risk to current and potential shareholders. While Europe’s ESRS is on track to go into effect this coming summer, those climate policy headwinds in the US have delayed — and are imperiling — finalization and implementation of the SEC’s proposed reporting framework.EU Greenflation Worries ✘What we forecast: Almost two months before Russia invaded Ukraine, Gro anticipated that the pace of Europe’s clean energy transition might face political pressure prompted by then-growing worries about rising inflation and high energy prices.What surprised us: Despite record high inflation and food and energy prices, Russia’s aggression on the battlefield and in the energy markets looks like it will, if anything, result in a slight acceleration of Europe’s clean energy transition as the EU’s 210 billion euro ($213 billion) REPowerEU plan issued in May makes it clear that energy efficiency, renewable electricity, and heat pumps are being viewed as the key to ending the EU’s dependence on Russian gas. &nbsp;

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Gro’s Climate Policy Forecasts for 2022 - How Did We Do?

With the Mississippi River near record low levels, disruptions to river barge traffic are hampering fertilizer deliveries to newly harvested fields in the US Corn Belt.&nbsp;While the bulk of nitrogen, phosphorus, and potassium-based fertilizers is applied to fields in the spring, farmers also apply the fertilizers after the fall harvest to replenish soil nutrients. Some 61% of US corn has been harvested as of this week, as shown by this <a href="https://app.gro-intelligence.com/displays/gRkBOJEqQ" target="_blank" rel="noopener noreferrer">Gro Portal display</a>.&nbsp;&nbsp;Restrictions on barge capacities heighten the risk of localized supply outages at key fertilizer distribution hubs throughout the Corn Belt. That could force some farmers to reduce their post-harvest fall applications and could increase upriver fertilizer prices relative to prices downriver at New Orleans.&nbsp;&nbsp;Fertilizer wholesalers and retailers traditionally begin purchasing inventory for fall use during the third quarter after spring planting, but they will also buy just-in-time volumes as the fall application window nears. A significant portion of these volumes load in New Orleans, Louisiana, (Nola) — a major trading hub for imported and domestically produced fertilizers — and transit upriver.Grain shipments moving south on the Mississippi River have also been affected, as transportation costs have surged and grain export volumes have dropped by double-digits compared with previous years. That has placed US corn exports at a competitive disadvantage to other origins, especially Brazil, as Gro wrote about <a href="https://gro-intelligence.com/insights/drought-hit-mississippi-river-threatens-corn-soybean-exports" target="_blank" rel="noopener noreferrer">here</a>.&nbsp;Below-average rainfall and persistent drought conditions along the Mississippi River, as shown by this <a href="https://app.gro-intelligence.com/displays/NdVaG6N9v" target="_blank" rel="noopener noreferrer">Gro Portal display</a>, have parched the major trade flow artery. That has forced barge operators to reduce barge drafts — the height of the waterline on the barge hull — resulting in cuts to volume capacities of as much as 30% per barge compared to normal river conditions, according to industry estimates.&nbsp;The ongoing logistics problems on the Mississippi River further squeeze US farmer profit margins. That could translate to cutbacks in input expenditures for spring applications, which in turn could reduce crop yields.&nbsp;Gro’s Global Fertilizer Impact Monitor is the first tool to quantify the potential impact of reduced nitrogen fertilizer applications on crop production worldwide in a fully transparent way. The monitor — which Gro built with support from the Bill &amp; Melinda Gates Foundation and in partnership with the International Fertilizer Association and CRU Group — is free for anyone to use and can be found <a href="https://community.gro-intelligence.com/global-fertilizer-impact-monitor/" target="_blank" rel="noopener noreferrer">here</a>.

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Parched Mississippi River Slows Fertilizer Delivery to US Corn Belt

La Niña’s unusual return appearance for a third year in a row bodes well for next year’s palm oil production in Indonesia and Malaysia, the two biggest producers.A Gro analysis previously found that above-average precipitation in the two countries, which typically accompanies La Niña climate events, is often associated with higher palm oil yields 6-8 months later and possibly longer.&nbsp;NOAA’s Climate Prediction Center (CPC) estimates that there is a 91% chance of La Niña weather conditions continuing through November 2022. Although the CPC expects La Niña will also stick around through the Northern Hemisphere winter, it ascribes a lower, 65% chance of this occurring.&nbsp;Historically, La Niña tends to bring above-normal precipitation for much of Indonesia and Malaysia from August into November, a trend that is also bearing out this year. This would suggest higher palm oil production early in the second quarter and into the third quarter of 2023. One widely followed, medium-term forecast model, the North American Multi Model Ensemble, appears to be picking up on this signal and has above-normal precipitation forecast for most of Indonesia and Malaysia this fall.&nbsp;<a href="https://hub.gro-intelligence.com/plot-region/agriculture/1123,Malaysia:1095,Indonesia$%7B%22checked%22%3A%5B%22OilPalm%22%5D%2C%22method%22%3A%22sum%22%7D_0?0,World:12,Asia:1123,Malaysia" target="_blank" rel="noopener noreferrer">Gro’s Climate Risk Navigator for Agriculture</a> shows that soil moisture is at its highest level since at least 2010 in the palm growing areas of both Indonesia and Malaysia, a factor that should give a boost to palm oil yields in coming months.&nbsp;&nbsp;<figure class="image"><img src="https://res.cloudinary.com/gro-intelligence/image/upload/v1663707425/new-website/Daily_Soil_Moisture_in_Palm_Growing_Areas_of_Indonesia_48945d8370.png"><figcaption>The red line in this chart from Gro’s Climate Risk Navigator for Agriculture shows current soil moisture in palm growing areas of Indonesia is at its highest level in at least a decade, pointing to increased production in 2023 in the world’s largest palm oil producer.</figcaption></figure>Palm plantations need regular precipitation to replenish water tables that are constantly being depleted by the thirsty trees. In Malaysia’s top two palm growing states of Sarawak and Sabah, aggregated precipitation so far this calendar year, weighted for palm-growing areas using <a href="https://hub.gro-intelligence.com/plot-region/agriculture/11602,Sabah:11603,Sarawak$%7B%22checked%22%3A%5B%22OilPalm%22%5D%2C%22method%22%3A%22sum%22%7D_1?0,World:12,Asia:1123,Malaysia:11602,Sabah" target="_blank" rel="noopener noreferrer">Climate Risk Navigator</a>, is running at the fifth-highest level of this century. Soil moisture for the two states’ palm areas is the highest since at least 2010.&nbsp;Previous La Niña years resulted in higher palm oil yields. In the first half of 2019, Malaysia’s monthly crude palm oil production increased from the prior year by an average of 5.3% following the La Niña rains of 2017/18. 2020 and 2021 were also La Niña years, but production in both Indonesia and Malaysia was curtailed by labor shortages due to COVID restrictions. Other factors, including fertilizer applications, also can affect palm plant yields.&nbsp;Prices for palm oil, the most widely consumed vegetable oil, have dropped sharply from highs reached in April 2022, but recently increased again in concert with <a href="https://app.gro-intelligence.com/displays/V9NBojk9b" target="_blank" rel="noopener noreferrer">soybean oil</a> as forecasted production for the US soybean harvest has diminished. Meanwhile, global palm oil supplies have expanded amid stepped up exports from Indonesia and Malaysia. That’s a reversal from conditions this past winter, when the Russian invasion of Ukraine exacerbated worldwide shortages of a host of vegetable oils.&nbsp;&nbsp;View a <a href="https://app.gro-intelligence.com/displays/V9NBNok9b" target="_blank" rel="noopener noreferrer">Gro Portal display</a> showing palm oil production, inventories, and trade among major global producers and consumers.&nbsp;&nbsp;La Niña conditions are currently in place, according to the CPC’s <a href="https://origin.cpc.ncep.noaa.gov/products/analysis_monitoring/ensostuff/ONI_v5.php" target="_blank" rel="noopener noreferrer">Oceanic Niño Index</a>, which is calculated based on ocean temperatures in a specific part of the Pacific Ocean. A separate index called the <a href="https://app.gro-intelligence.com/displays/8kR074Mqz" target="_blank" rel="noopener noreferrer">Multivariate ENSO Index</a>, which is available on Gro's web Portal, also indicates La Niña is in effect — negative values signal La Niña conditions while positive values point to El Niño conditions. The Multivariate ENSO Index includes additional variables such as sea level pressure.&nbsp;La Niña tends to create drought and dry conditions in many parts of the world, including Brazil, Argentina, and the US, while bringing additional precipitation to other areas, such as Australia and parts of Asia.&nbsp;

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La Niña’s Return Points to Higher Palm Oil Production in 2023

In this report, we will talk about how to use growing and climate conditions in a systematic way to better anticipate impact on final yield throughout the growing season—from planting to harvest.&nbsp;<a href="https://info.gro-intelligence.com/incorporating-climate-into-agricultural-forecasting" target="_blank" rel="noopener noreferrer">Download the report here.</a>

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