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Investors in agricultural commodities have always had to keep an eye on the weather. But maybe they should keep a watch on the climate too.

That's because global warming has the potential to be a boon for profit seekers. The reason: a hotter climate could undermine crops, leading to smaller harvests and higher prices.

Up until now, it's been hard to prove that global warming could put a dent into agricultural output, but a U.S. research team says it has done just that. The findings are good news for those buying agricultural commodities and related investments, such as Canadian farmland. The biggest upside potential might be in wheat and corn .

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By studying temperature and yield records from 1980 to 2008, the team of academics from Columbia University and Stanford University estimated that the global trend to warmer temperatures has led wheat yields to be 5.5 per cent lower than they would have been had the climate been stable, and corn yields to be 3.8 per cent lower.

The reduction spread out over the world was the equivalent to losing the annual corn harvest from Mexico and the wheat harvest of France. Soybean and rice crops were also studied, but exhibited no overall trend change.

The smaller harvests of wheat and corn have helped push crop prices up an estimated 20 per cent, according to Wolfram Schlenker, one of the researchers and a professor in the economics department at Columbia.

The "20 per cent is a sizable amount," Dr. Schlenker said, but he cautioned that it's just part of the equation that explains the approximate tripling in prices of the key foodstuffs over the last four years. Other factors have played a part, including rising populations and government incentives to convert corn into gasoline additives.

All About Yields

Crop yields are one of the critical variables for determining agricultural prices. On a year-to-year basis, yields fluctuate sharply because of such factors as droughts and floods, but over the long term, they've risen because of the use of more fertilizers, better seeds, and other innovations. It's the reason farmers have been able to feed the world's burgeoning population.

The research team's findings, which covered trends in the world's four most important staple crops, appeared Thursday in the journal Science. The crops they studied-corn, wheat, rice and soybeans-directly and indirectly account for about 75 per cent of the calories people consume.

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Dr. Schlenker said that diminished harvests for wheat and corn prompted consumers to buy the other two grains, forcing their prices up was well. The finding suggests that a changing climate has the potential to raise the prices of many crops, even some whose output isn't actually sensitive to higher temperatures.

Lucky North Americans

There was upside for Canadian farmers from the research. In their number crunching, the researchers noted no effect on yields in Canada and the U.S., because temperatures haven't risen in those countries as they have elsewhere around the globe.

Negative impacts have been observed in other agricultural regions, such as those in Russia. For some crops, such as soybeans, warmer weather caused offsetting harvest pluses and minuses, depending on the extent of temperature changes. For instance, Dr. Schlenker said, yields rose in Argentina, but fell in Paraguay, which lies slightly further north of it in South America.

"Pretty much every climate model says that [North American farmers]will get warming too," but it has not yet been affected by the trend, Dr. Schlenker said.

This has been "doubly good" because farmers have had larger crops and higher prices, he said.

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While the research is some of the first to confirm that global warming affects crop levels, some agricultural-related investment vehicles have already been twigging to the theme.

This is "one of the reasons why when we looked around the world at agricultural investing, we just thought Canada is where you have got to be, and we're seeing more and more people reach that conclusion," said Tom Eisenhauer, president of Bonnefield Financial, a firm that invests in farmland.

Mr. Eisenhauer says most warming is likely to occur at latitudes to the south of Canada's prime agricultural lands.

Warming damages crops because plants have a Goldilocks relationship to temperature, thriving when conditions are neither too hot or too cold. By studying crop results and temperature readings, the researchers determined that a one-degree rise lowered yields by up to 10 per cent.

Higher amounts of carbon dioxide, the main greenhouse gas, do stimulate plant growth, although this benefit has been outweighed by the crop damage from higher temperatures.

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