Trading Volume Spikes to New Record on Tuesday

July 1, 2015 07:00 PM
 
Trading Volume Spikes to New Record on Tuesday

If you thought the markets went a bit crazy on Tuesday, you were right.

Spurred by new Acreage and quarterly Grain Stocks numbers released by the USDA on June 30, trading volume for agricultural commodities hit a new record at 2.874 million contracts, according to CME Group.

As prices climbed, individual ag commodities also reached new trading highs, with more than 845,000 corn futures contracts and more than 503,000 soybean futures contracts. So did options for Chicago soft red winter wheat, which saw more than 98,000 contracts Tuesday.

While some of these volumes—corn and Chicago soft winter wheat—broke records established in just the last few days, that wasn’t the case for all of them. The last time soybean futures traded at such high volumes was eight months ago, when volume hit more than 486,000 on October 28, 2014.

The festivities ended Wednesday, when the market retreated from Tuesday’s highs.

Unlike other grains, corn futures held relatively steady, inching up by a few cents on Wednesday.

“The market continues to process USDA’s stocks and acreage data in light of Monday’s declining crop ratings amid heavy producer selling and an approaching three-day holiday weekend,” said Arlan Suderman, senior market analyst for Water Street Solutions in Peoria, Ill. “ Today’s lower prices were not a surprise, considering Tuesday’s big gains. Some speculators wanted to claim profits ahead of leaving town for an extended Fourth of July holiday weekend. Other weakness came from producer selling on the rally. Furthermore, a sharp rise in the dollar produced broad-based selling in the major commodity indices, of which the grains are a part. That amplified losses in corn. However, today’s market never looked like a market that was collapsing.”

Wheat wasn’t so lucky. It got hammered, with prices plummeting 27 cents for July and September futures to land at $5.874 (July) and $5.884 (September).

“Wheat prices collapsed today, reversing the previous day’s gains,” said Suderman. “This shouldn’t be a surprise. The pattern over the past couple of months has been for a volatile roller coaster ride where each rally takes out the previous high by a modest amount and the following break stays a small amount above the previous low.”

Soybeans fell somewhere in the middle. September futures opened at $10.39, rising and falling before they finally gave back almost 9 cents to close at $10.326.

“I remained comfortable with the losses in the soybean market through the day due to continued strength in the soymeal market … “ Suderman said. “Gains will likely be more difficult in the days ahead, but fears about declining acreage and sliding crop ratings will likely provide good support beneath the market.”

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