How different the world was just two years ago in December,...

How different the world was just two years ago in December, 2019. There couldn't have been too many back then who would have expected the years ahead to pan out as they did.

As the year draws to a close, it might be an opportune moment to consider if in the near future there might be another unexpected shock waiting in the wings.

I haven't posted on this site for a couple of months, as my attention has lately been focused elsewhere. However, this thread on the theme of 'weather' would seem to be an appropriate enough spot to post some of my thoughts on a matter that would seem to fall within the scope of this heading.

So, getting back to the question posed above, I would raise the possibility that a major volcanic eruption might prove to be a bolt from the blue sometime in the next few years.

In recent months, spectacular volcanic eruptions have taken place in the Canary Islands, and just within the past 24 hours, the volcanic eruption on the Indonesian island of Java has caught the attention of the international media. These events are devastating at a local level, but so far don't appear to be major volcanic events.

However, a major volcanic eruption would seem to be well overdue. The only significant volcanic eruption to take place so-far this century was the 2011 eruption of the Puyehue-Cordón Caulle volcano in southern Chile, which commenced in June 2011, not finally settling down until April of the following year.

The gases ejected in volcanic eruptions can have a significant influence on the weather, and there is a real possibility that the eruption of the aforementioned volcano might have even impacted this company.

The lousy weather that disrupted Select Harvest's 2012 harvest could have been a side-effect of this eruption, the clouds of sulphur-dioxide and dust particles thrown out of this Chilean volcano circling around the southern-hemisphere and ultimately jinxing the local weather patterns.

The power of volcanic eruptions is measured by the Volcanic Explosivity Index (VEI), which starts at 1, with each rung up the later representing a ten-fold increase. On this measure, the Puyehue-Cordón Caulle volcano, ranks as a '5' on the Volcanic Explosivity Index, powerful enough to exert a significant influence across a regional level.

To put the 2011 event into perspective, there were five VE5 eruptions in the second half of the 20th century:  Bezymianny in Russia in 1956, Mount Agung in Bali in 1963, Mount St. Helens in the US in 1980, El Chichón in Mexico in 1982, and finally, Hudson in Chile in 1991.

In summary, roughly one VE5 eruption per decade, although note that major eruptions sometimes seem to cluster together.

The Puyehue-Cordón disaster was the only VE5 level eruption to have occurred in the past 20 years, and thus the world would seem to be set for another in the near future.

However, over the course of human history some volcanic eruptions have been far more potent.

The most powerful type of eruption to occur over the span of human history are the VE7 eruptions, the last of which took place at Mt Tambora in the year 1815.  This cataclysm resulted in major weather and climatic disruptions, leading to famines in many regions of the world.

Fortunately, such apocalyptic eruptions occur only once an epoch or so, and there have been just four or five of them within the past two millennia.

VE6 eruptions are lesser in magnitude, but still remain a force to be reckoned with. VE6 eruptions are many times more powerful than VE5 eruptions, as illustrated in the below graphic taken from Geology.com.



The last major VE6 eruption to occur was when Mount Pinatubo blew its top, in June of 1991.

In the same way that the Puyehue-Cordón eruption of Chile seems to have been the bane of Australian almond growers in 2012, the baleful influence of Mt Pinatubo may have loaded the dice to the detriment of the almond growers of California. The terrible storms that clobbered almond orchards throughout California in early 1995 may well have been triggered by the dust and gasses that were pumped into the air by this massive eruption years before.

Prior to Pinatubo, there was a long gap of nearly eighty years, with the Novarupta volcanic eruption of 1912 being the only event to fall within the same ballpark. The first VE6 event of the century was only ten years prior, in Guatemala. Overall, across the 19th and 20th centuries there have been in total six eruptions of VE6 magnitude or greater, including the massive VE7 event at Mount Tambora.

That would seem to indicate that very powerful volcanic eruptions take place, on average, about once every 33 years.

In summary, the VE5 eruptions take place about once a decade, and the last eruption of this magnitude took place in Chile almost exactly a decade ago. The even more powerful VE6+ eruptions take place roughly every 33 years on average, and the last eruption, at Pinatubo, was over thirty years ago now.

Today, it would thus appear that a major volcanic eruption is well-overdue.

From an investment perspective, it is difficult to determine the winners and losers from such an event, although a major volcanic event could prove to be the final nail in the coffin of some airline companies, most already having been battered by the pandemic border closures. Insurance companies would also be an obvious loser in such a scenario.

Winners from such a scenario are a bit harder to pick, although an interesting 1993 article from the Washington post hinted at a link between a surge in the prices of certain agricultural commodities and the Pinatubo eruption-

...Which brings us to that volcano -- Mount Pinatubo in the Philippines, which erupted on June 15, 1991, spewing tons of ash and debris into the atmosphere.

Paul Handler, a retired physics professor from the University of Illinois at Urbana-Champaign, believes that it's been affecting our weather ever since. Handler has been gaining more adherents since he published a scholarly paper 10 years ago identifying worldwide weather patterns that follow volcanic eruptions.

While many scientists believe that long-range weather forecasting is impossible, Handler, who also puts out a newsletter for farmers and investors called Atlas Forecasts, has proven uncannily accurate. He actually predicted this year's Midwest floods (though not their incredible extent) in an interview in December 1992.

He says that sulfur dioxide thrown into the air decreased solar energy in the first year after the Pinatubo eruption by 3 percent -- an enormous amount. The effect was to cause "El Nino," a cool wind current originating in the tropical Pacific....

...The common pattern after a volcano, says Handler, is two years of wet and one year of dry. Normally, this pattern won't have severe effects on food prices since wet years are good for crops. But 1993 was a 100-year anomaly -- a wet year that was a disaster for crops. The floods washed away nitrogen, damaged roots and produced small ears of corn.

If Handler is correct, the United States could be in for two bad years in a row -- and the price of corn could soar to $4 a bushel and beyond...

Curiously, Handler's corn price prediction proved to be correct.

In closing, it is worth noting that while there are few active volcanoes in Australia, there are a number located in and around California, as evident in the map from USGS, below.

Needless to say, a VE5 eruption in California would likely cause major disruptions to the almond industry. Such an event would be extremely rare, but is just one of the many natural disasters that present a risk to Californian growers.