What you need to know about El Nino in one picture

The latest information from NOAA  suggests that we will have a stronger and longer El Nino that will last through the winter of 2015-2016. See climate.gov. The view is often that long-term events do to matter in volatile commodity markets but we beg to differ. It does matter how you position these risks. There may not be an impact in the front-month futures, but if you are trading out of the money option in the more distant futures there can be good opportunities to create high return to risk trades. We have had good rains in the Midwest but excessive in Texas. The wet Texas weather is consistent with a strong El Nino. The weather forecasts are weighted to dry weather in the corn belt. The timing for these option trades is now.