Veterans' Day in El Nino Years, and Soybean Prices 6 Months Later

The US Weather Service has made it official: We are now in an El Nino year. These years, in which the temperature over the Pacific Ocean is warmer than usual, can wreak havoc with the weather during the upcoming growing season.

Dramatic Impact of El Nino Weather Patterns

Since 1970, we have seen El Nino years in 1972, 1976, 1982, 1987, 1991, 1996 and 2002. In every single case, Soybeans were higher from the close on Veteran’s Day in these years to the close of Soybeans 6 months later.

Remember the drought in 1988? The average up move was a whopping 42%!

Soybeans have been on a tear lately. I’d use any significant pullback to load up  on July Soybean futures and/or buy some  out of the money vertical call spreads. Again, I’d use the July series and would  go long, for example, the 7.00 calls and short the 7.60 calls.

Soybeans are one commodity that has not really participated yet in the commodity boom. Their time is nigh!

The Soybean's time is nigh!