Unprecedented price action hits the pits

wheat field

We have seen things in the grain markets over the last week that we have never seen before — price action so unprecedented that I don’t even have to check the history to know they never happened before.

This is what happens when uncertainty hits markets that trade on knowledge. Lack of knowledge is scary, and high prices and volatility result.

We have been talking regularly about volatility, or fast price change, but until last week, we maybe did not know what it really was.

Take this example: On March 2, the Chicago July ’22 wheat contract touched limit up, while the July ’23 contract went limit down at the same time!

Or this one: Minneapolis May wheat locked limit up at $11.781⁄4, and then locked limit down just 30 minutes later. Thirty minutes after that, we were $1.041⁄2 higher again.

Or, one more example, over a little more time: In the previous week, both new crop corn and soybeans were sharply lower late in the week, but were sharply higher last week. Feb. 28 and March 1, May corn was limit up. During the day March 3 and 4, they touched limit up.

Market movement

Looking at some of the numbers, March corn futures touched the magic round number of $8 March 4. We are actually trading cash corn off the May futures now, but the number is still on the charts.

This morning, March 8, the same March futures are down to $7.373⁄4, off almost 12 cents for the day so far. December corn futures had a high of $6.47, but closed at $6.291⁄2 March 4. That close was still up 171⁄2 cents from the previous high. The daily high was up 351⁄2!

December corn was up another 131⁄4 March 7, but was up 20 cents at one point. The morning of March 8 we were off a nickel, at $6.373⁄4. December futures had a big ride March 3 and 4, with a 69-cent range over the two days.

For the week, the May corn gained 981⁄2 cents, while December rallied 493⁄4. The soybean market had the biggest action March 3 and 4, also. May soybean futures traded a $1.791⁄2 range on those days, with a high of $17.65 and a low of $15.851⁄2.

The morning of March 8, we were up 12 cents, at $16.711⁄2. So, soybeans are back near the highs, but corn is not.

And yet, for the last two weeks, the trend is for the corn to gain on the soybeans. November soybeans finished 163⁄4 cents lower, while the December corn futures were 213⁄4 cents higher.

Chicago wheat

That brings us to Chicago wheat. It is a little thrilling to look at the update on your smartphone and see wheat futures up 85 cents in one day. Chicago wheat futures were up $3.25 in the last week. Yes, more than three dollars. You are reading it correctly.

But, notice that the difference between July ’22 futures and July ’23 on the Chicago Board is a whopping $3.72! The party is for this year, and next year has been helped, but is not along for the big ride.

It makes sense that wheat is leading the price parade. Ukraine is seen as one of the world’s great wheat areas, and we now worry if any of their winter wheat will actually get shipped. I have to assume much of it will, but the market acts like what does not get run in the mud by Russian tanks will never get shipped through Russian-controlled ports on the Black Sea.

All Russia has to do is capture Odessa, and they will have all the ports, whereas they had none a few years ago. In fact, some wheat will survive and be shipped, and the markets will adjust.

The adjustment is a little different for corn. It has sneaked slowly into our consciousness that acres of corn in Ukraine have increased. They still have a big chunk contracted, but not shipped. Until this war stops, I would guess no ships will enter Black Sea ports, especially since one was fired on this week.


That gets us to soybeans, which are along for the ride. Traders love to speculate in soybeans, so they have to move in price when wheat and corn are jumping higher.

However, there is no fundamental reason I understand why soybean fundamentals are affected here, except as they compete for acres planted this spring. They are just trading in sympathy, and in fear.

Cash grain farmers need to reward the selling opportunities being presented here, but it is easy to be conservative and tell ourselves that there is plenty of time. Actually, there is not much time, unless all commodities are blowing out the top. The market ends when everyone says it has to go higher.

There are legitimate production concerns. What does a Ukrainian farmer do about planting with all the uncertainty about who will be running the country and what the financial landscape will look like. What will the currency be worth? Should a farmer put his money and work into a crop only to have it stolen by an invader?

I would think that Putin thought he would roll into Ukraine and be greeted as a hero, not a zero. Now we don’t know what will happen to Ukraine or to agricultural production there, and that lack of knowledge is being wildly expressed in the markets.


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