The El Nino weather phenomenon may wreak havoc elsewhere, but for Chicago it’s a pretty good deal.
As a direct result of warm ocean currents developing off South America, the city’s winter will be milder than usual.
At the same time, El Nino will keep Chicago traders happily engaged as it roils the city’s grain and livestock markets. And it makes agricultural meteorologists like John Dee more important than ever.
For Dee, president of Global Weather Monitoring, it’s nice to feel wanted. Less than a decade ago, fresh out of Purdue University, he barely could give away his forecasts for free.
Dee’s career in the markets got off to a stormy start when Stotler Group hired him out of school just two months before the once-venerable trading firm collapsed in a financial scandal.
Dee decided to stick around Chicago, even though no one would pay him. “I didn’t have an established track record,” he explained. “The only way I could get them to look at it was to give them free samples.”
After months of wallpapering trading-firm offices with his forecasts, he began broaching the topic of money. “I just sort of felt them out,” he said. “When it seemed like they were real happy with me, I’d approach them with a contract.”
For the most part, the sampling campaign worked. And a few years ago, he settled down by signing an exclusive deal with Iowa Grain Co., which keeps him out of the rain today.
So, will El Nino affect the markets as much as everyone seems to think? “My approach is to never sensationalize,” Dee said.
To be sure, tropical crops like sugar, cocoa and coffee will feel the effect, as will Southern Hemisphere corn and soybean crops, he said. But for the U.S., he expects “nothing overly dramatic.” And while Chicagoans can expect “an absence of real harsh cold” this winter, it won’t be like Miami Beach in January.
Can we count on that? “If I say things are going to happen, people can count on me believing in my heart of hearts that I’m going to be right,” Dee said. “Now, I may be wrong. . . .”
S&P still OK: Losing the bidding war earlier this year for the license to trade futures on the Dow Jones industrial average might not be the disaster it seemed for the Chicago Mercantile Exchange.
The Merc’s scaled-down, electronic version of its Standard & Poor’s 500 futures had a respectable week in spite of competition from the Oct. 6 launch of Dow futures at the Chicago Board of Trade.
The “E-mini” posted volume of 53,975 contracts last week. And on Wednesday, more “E-mini” futures traded than Dow futures.
Of course, the Dow had a better week overall, posting volume of 99,134 contracts. The Dow far surpassed the E-mini in options on futures, which never seem to trade as well on the screen as in open outcry.
“We’re pleased,” said CBOT Chairman Patrick Arbor. “It’s about as expected. It’s going to take some time to build.”
Meantime, the Chicago Board Options Exchange had the best showing of all. In the first week of Dow options trading, 239,877 contracts changed hands.
CBOT vs. CFTC: The battle continues between the Board of Trade and the Commodity Futures Trading Commission over grain and soybean contract delivery terms.
On Wednesday, exchange officials will speak out at a public hearing before the CFTC in Washington. But since everyone involved already has staked out their positions, insiders say the hearing is unlikely to bring about any big changes.
The CFTC says the exchange must include Toledo, Ohio, as a delivery point for soybeans. The Board of Trade, meantime, will argue that an exchange proposal eliminating Toledo can provide ample soybeans for delivery.
On Thursday, Arbor and CBOT President Thomas Donovan plan to meet with commissioners to argue the case again.
And if nothing changes after that? A court challenge probably looms.
