Skip to main content Accessibility help

ENSO and Soybean Prices: Correlation without Causality

  • David Letson (a1) and B.D. McCullough (a2)


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 that ENSO is economically important.



Hide All
Adams, R., Bryant, K., McCarl, B., Legier, D., O'Brien, J., Solow, A. and Weiher, R. (1995), “Value of Improved Long-Range Weather Information,” Contemporary Economic Policy 13(3),1019.
Barnston, A., van den Dool, H., Zebiak, S., Barnett, T., Ji, M., Rodenjuis, D., Cane, M., Leetma, A., Graham, N., Ropelewski, C., Kousky, V., O'Lenic, E. and Livezey, R. (1994), “Long-Lead Seasonal Forecasts: Where Do We Stand?Bulletin of the American Meteorological Society 75, 20972114.
Bloomfield, P. (2000), Fourier Analysis of Time Series: An Introduction, New York: Wiley.
Box, G. E. P. and Jenkins, G. (1976), Time Series Analysis: Forecasting and Control, San Francisco: Holden-Day.
Doan, T. (1997), RATS: Regression Analysis of Time Series, v. 4.3, Evanston, IL: Estima.
Ferreyra, R.A., Podestà, G.P., Messina, C.D., Letson, D., Dardanelli, J., Guevara, E. and Meira, S. (2001), “A Linked-Modeling Framework to Estimate Maize Production Risk Associated with ENSO-related Climate Variability in ArgentinaAgricultural and Forest Meteorology 107(1) 177192.
Geweke, J. (1984), “Inference and Causality in Economic Time Series Models,” in Handbook of Econometrics, vol. 2, Griliches, Z. and Intriligator, M., eds., Amsterdam: Elsevier Science, 11011144.
Glantz, M. (1996) Currents of Change: El Nino's Impact on Climate and Society, New York: Cambridge University Press.
Granger, C.W.J. (1969), “Investigating Causal Relations by Econometric Models,” Econometrica 37, 424438.
Granger, C.W.J. (1988), “Causality, Cointegration and Control,” Journal of Economic Dynamics and Control 12, 551559.
Ihaka, R. and Gentleman, R. (1996), “R: A Language for Data Analysis and Graphics,” Journal of Computational and Graphical Statistics 5(3), 299314.
Johnson, S.R. and Holt, M.T. (1997), “The Value of Weather Information” In The Economic Value of Weather and Climate Forecasts, Katz, R.W and Murphy, A.H., eds., New York: Cambridge University Press, 75107.
Keppenne, C.L. (1995), “An ENSO Signal in Soybean Futures Prices,” Journal of Climate 8, 16851689.
Latif, M., Barnett, T., Cane, M., Flugel, M., Graham, N., von Storch, H., Xu, J. and Zebiak, S. (1994), “A Review of ENSO Prediction Studies,” Climate Dynamics 9, 167180.
Letson, D., Llovet, I., Podest, G.P.à, Royce, F., Brescia, V., Lema, D. and Parellada, G. (In Press), “User Perspectives of Climate Forecasts: Crop Producers in Pergamino, Argentina” Climate Research.
McCullough, B.D. (1997), “An Analysis of Stock Market Transactions Data,” The Quarterly Review of Economics and Finance 37, 887903.
McCullough, B.D. (1998), “Algorithms for (Partial) Autocorrelation Coefficients,” Journal of Economic and Social Measurement 24, 265278.
Messina, C.D., Hansen, J.W and Hall, A.J. (1999), “Land Allocation Conditioned on El Niño-Southern Oscillation Phases in the Pampas of ArgentinaAgricultural Systems 60(2), 197212.
Mjelde, J.W, Hill, H.S.J. and Griffiths, J.F. (1998), “A Review of Current Evidence on Climate Forecasts and Their Economic Affects in Agriculture,” American Journal of Agricultural Economics 80(5), 10891095.
Montray, D.L., Richmand, M.B. and Lamb, P.J. (1998), “Observed Nonlinearities of Monthly Teleconnections between Tropical Pacific Sea Surface Temperature Anomalies and Central and Eastern North American Precipitation,” Journal of Climate 11(July), 18181835.
National Research Council (1996), Learning to Predict Climate Variations Associated with El Niño and the Southern Oscillation, National Academy Press.
National Research Council (1999), Making Climate Forecasts Matter, National Academy Press.
Ropelewski, C.F. and Halpern, M.S. (1986), “North American Precipitation and Temperature Patterns Associated with ENSO,” Monthly Weather Review 114(December), 23522362.
Ropelewski, C.F. and Halpern, M.S. (1987), “Global and Regional Scale Precipitation and Temperature Patterns Associated with ENSO,” Monthly Weather Review 115(August), 16061626.
Ropelewski, C.F and Halpern, M.S (1989), “Precipitation Patterns Associated with the High Index Phase of the Southern Oscillation,” Journal of Climate 2(March), 268-184.
Solow, A., Adams, R., Bryant, K., Legier, D., O'Brien, J., McCarl, B., Nayda, W. and Weiher, R. (1998), “Value of Improved ENSO Prediction to U.S. Agriculture,” Climatic Change 39, 4760.
Sun, C.H. and Chen, S. (2000), “The Value of ENSO/SST Forecasts for the Mackerel Purse Seine Fishery in Taiwan,” presented at American Association of Agricultural Economics meeting, August.
Trenberth, K. (1997), “The Definition of El Niño,” Bulletin of the American Meteorological Society 78, 27712777.
Trenberth, K. and Hoar, T. (1996), “The 1990-1995 El Niño-Southern Oscillation Event: Longest on Record,” Geophysical Research Letters 23(1), 5760.


ENSO and Soybean Prices: Correlation without Causality

  • David Letson (a1) and B.D. McCullough (a2)


Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed