TRADING IN THE WEATHER OF EL NINO

摘要

The grain markets remain one of the few commodity sectors still experiencing a contraction in volatility. The downward trend has been steady, unrelenting and a textbook version of El Nino's typical, "buy the rumor, sell the fact" trading pattern. This has allowed large speculators to profitably pile into the short side of the trade. Their profitability could end abruptly as grain users begin to lock in the future processing margins and weather patterns shift towards a more harmful La Nina effect late in the summer. This could help offset the exceptionally large global inventory currently capping potential rallies.