Looking for a contrarian trade? Try food.

Bet on Food.

And El Niño.

In a note to clients earlier this week, analysts at Jefferies said that if investors are looking for a contrarian trade, the broad decline in the price of fod and an emerging El Niño could be a good place to start.

Jefferies that contrarian investments aren’t just ones that are cheap or unpopular, but ones that are “so loathed that investors who might recommend it would be subject to ridicule, rejection or actual banishment from the investment process altogether.”

In other words, while everyone else strongly disapproves an asset class “because investors have lost money (and peer group approval) trying to time the bottom of the market,” contrarian investors must look beyond the common sentiment.

And so according to the firm, that place now is food.

“An emerging El Niño, a CRB food price index that is bouncing off five-year lows and total grain net long speculative positions at more than nine-year lows would indicate that a long position in foodstuffs might be warranted,” the report said.

Jefferies wrote that, “Academic evidence indicates [El Niño Southern Oscillation] cycles have a statistically sensitive impact on world real commodity reports,” adding that that, “one-year standard deviation surprise in ENSO raises real commodity price inflation between 3.5% and 4%.”

And so price increases in food could be coming, and an asset class that has been a major disaster in the last few years could be a place to find big gains. Or at least might be a place no one else is looking.

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