ENSO AND SOYBEAN PRICES: CORRELATION WITHOUT CAUSALITY

In this paper we seek to characterize the robustness of the ENSO/soybean price relationship and to determine whether it has practical economic content. If such a meaningful relationship exists, the implications could be profound for commodity traders and for public sector investments in climate forecasting capabilities. Also, the validity of economic evaluations of climate impacts and climate forecasts based on ENSO-price independence would come into question. Our findings suggest a relationship between interannual climate and soybean prices, although we are not able to attribute the relationship to ENSO or to say the ENSO is economically important.