(The Center Square)–Prediction markets spent three weeks heavily favoring Flávio Bolsonaro to be Brazil’s next president. That collapsed Sunday night. Tuesday, the same markets take on the U.S. Senate.
Kalshi and Polymarket put Democratic control of the Senate at 70% and 73% as of Friday morning. Forecaster Nate Silver’s model put it near 75% as of Oct. 29.
The Cook Political Report rates seven Senate races as toss-ups but said Friday it sees Democrats as “the slight favorites,” citing what Senate editor Jessica Taylor called a “dismal national political environment for Republicans.”
In September, the forecasters were further apart: a paper published Oct. 15 in “PS: Political Science & Politics” found the Iowa Electronic Markets and Kalshi pointing to opposite parties taking the chamber.
Kalshi is a federally regulated exchange, designated by the Commodity Futures Trading Commission, the agency that oversees futures and derivatives trading. Traders buy shares in an outcome. Each share pays a fixed $1 if the outcome happens and nothing if it doesn’t, so the price of a share reads as a probability.
Democratic control of the Senate was trading at 70 cents on Kalshi on Friday morning, which is meant to say the event is about 70% likely. Kalshi alone has taken more than $114 million in trading volume on the question.
The Iowa Electronic Markets works the same way at a fraction of the size. Run by University of Iowa faculty since 1988 as a teaching and research tool, it caps what any trader can put in at $500.
A price on Kalshi or Polymarket looks like a probability, but the researchers who study these markets say that is not quite what it is.
Thomas Gruca, the George Daly Professor in Marketing at the University of Iowa and director of the Iowa Electronic Markets, has been comparing his own market with Kalshi. In a July working paper with Thomas Rietz, a finance professor at Iowa, the two found that Kalshi contracts priced to win one time in five actually won less than 1.5% of the time.
Across 44 Iowa election markets, prices tracked outcomes closely regardless of how big or active the market was. Gruca said the data stops where the paper’s collection stopped, and he cannot say what Kalshi’s prices have done since.
Gruca said the difference is in what moves the price. Momentum, he said, means traders buying because a price has been rising, “not because there’s a change in the underlying fundamentals of what’s going to happen on election day.”
Looking at Kalshi’s daily price charts, he told The Center Square, “these things are kind of jumping all over the place. They’re vibrating all the time. There’s really not that much happening day to day.”
Thomas Rietz, Gruca’s co-author, said the Senate is hard for a reason that has nothing to do with how the markets are built. He compares it to a weather forecast. A 25% chance of rain in Fairfax, Washington, Baltimore and Annapolis on the same day does not mean it rains in one city and stays dry in the other three. A band of showers goes through and hits all of them or none.
Senate races work the same way, Rietz said. Most of the competitive ones are inside the margin of error, and the candidates and the voters resemble each other from state to state. If Republicans beat expectations in one place, they are likely to beat them across the board, or fall short across the board.
“That uncertainty hasn’t gone away,” he told The Center Square.
Others go further. Christopher Wlezien, the Hogg Professor of Government at the University of Texas at Austin, has argued for years that prediction markets add less than their defenders claim.
In a 2012 paper with Robert Erikson of Columbia, he compared election-eve betting prices with final polls across 30 presidential elections going back to 1880. The polls were the better predictor, and when the two were tested together, the market prices added nothing the polls had not already captured.
Wlezien said he has not updated that analysis and cannot say whether poll-based predictions still beat market prices today.
“I’m not anti-market,” Wlezien told The Center Square. “I’m just pro data.”
Thomas Miller, faculty director of the data science master’s program at Northwestern University, agrees that a market price is not a probability and draws the opposite conclusion from it.
His NowCasting model takes prices from Kalshi and Polymarket, adjusts them so the contracts in each race sum to 100%, and runs them through a statistical model. On Oct. 27, it put Republican chances of holding the Senate at 23.4%, against about 36% on Kalshi the same day.
“Prediction markets provide event contract prices, not probabilities,” Miller said in written answers. “Traders are guessing. We are not.”
Kalshi’s own post-election analysis says the market had Flávio Bolsonaro near 80% when polls closed Oct. 25, and that the final Brazilian polls leaned the same way. Lula won 51.79% to 48.21%. By Kalshi’s accounting, the market missed the margin by about 7 points and the polls missed by about 5.6.
Kalshi’s published analysis offers a theory. Three weeks earlier, in the first round, polls had underestimated Bolsonaro. Traders adjusted for that going into the runoff, pushing the market further toward him than the polls were.
In the runoff, the polls were wrong in the other direction, and Lula won. The company noted that an 80% chance should be wrong about one time in five, and that Bolsonaro’s loss was one of those times.
In Wisconsin’s Democratic primary for governor on Aug. 11, Kalshi had state Rep. Francesca Hong at 95.49% on the day of the vote, where she had sat for most of the preceding week. Milwaukee County Executive David Crowley won by 3,673 votes out of 792,290 cast, less than half a percentage point, according to official results certified by the Wisconsin Elections Commission. Traders moved more than $16 million on the race.
Kalshi did not respond to questions from The Center Square about the Brazil pricing or the Wisconsin primary.
Wlezien said that is the part he keeps coming back to. A market price is supposed to be a probability already. If someone has to adjust it before it means anything, something has gone wrong with the number itself.
“You can just go look online and say, hey, 65,” he said. “That means like a two out of three chance, right?”
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
