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| Tensions in the Middle East lead to extreme volatility and a rally in the grains.
Last night as you probably know there was retaliation attacks in Iran from Israel.
This created created crazy price action in all of the markets. Crude went screaming higher. The stock market took a dump. Grains rallied then fell then rallied.
Beans made new lows before posting a key reversal, taking out yesterdays highs and closing above yesterdays highs, up +17 cents. The wheat market traded as high as +22 cents, closing up +14 cents.
Was it a one day wonder because of the attacks?
Hard to tell. Obviously further escalations could spark these markets and would continue to make the funds question how short they want to be, as they hold massive shorts. Even though this war doesn’t directly effect the grains, it scares the funds.
The funds being this short is friendly.
On the other hand as we have seen, sometimes war driven rallies tend to fade without further escalation.
One thing to note about today’s volatility is that this volatility should remind guys that options can be a good way to play things.
Increased volatility makes options more expensive. So if you are someone who wants to re-own or put in a floor, options are still cheap. Along with the potential war, the upcoming weather market will increase volatility and the premium of options. Look for this volatility to only grow.
If you take a look at the forecasts for this summer, they look very very hot. That is something we were missing last year, the extreme heat with Canadian wild fires etc. So things could definitely get dicey this summer if the outlook holds true.
I continue to see basis firming in many areas. Then we also have the spreads firmimg up in corn. Those are both good signs….
Listen to today’s audio where we go over how to use days like today to define your risk and reward in your marketing
Listen Here:
https://txt.so/1nOuG2
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One day wonder? Middle East extreme volatility & rally - market comments
