Crazy close in grains!
Apr 20, 2012
From The Editor
April 20, 2012
Hello Pro Farmer Members!
That was one of the craziest closes we've ever seen in the soybean market. Futures rallied leading into the expiration of the May call and put options on a couple of rumors. The first rumor doesn't make much sense... that Brazil was going to shutoff exports of beans and meal for some reason. That rumor was accelerated by speculation Spain would stop buying from Argentina in retaliation for Argentina taking over a Spanish oil company earlier in the week. Then the final rumor hit... that China was in and buying soybeans for July shipment out of the PNW. The Spanish-Argentine rumor might be true... but wouldn't have a major impact on prices. Regarding Brazil, I don't think that makes a lot of sense. And the Chinese buying could be absolutely true... and it would have a big impact on prices because it was rumored to be for old-crop shipment. Regardless of the reason, beans posted a huge rally into the close.
And then it got even more interesting. The wild rally into the close left a very wide range in the last minute of trade... that's known as the closing range. Then there is a "modified closing session" that determines the settlement for the day. The last tick of the day session in November beans was at about $13.61 3/4. The settlement was at $13.56. It's been a long time since the settlement was that far from the last tick of the day in the bean market.
Similar things happened in all the bean contracts and (to a lesser extent) in the corn market, too. That's about as crazy as a close as you can get for the week.
What's it mean for next week? Tough call, but the volatility of today's last few minutes of trade are likely to carry over into the start of next week's trade on Sunday evening.
Be sure to check out Jim Wiesemeyer's Inside Washington Today. It includes the Senate Ag Committee's summary of their farm bill package and a "few" comments about the farm bill from Jim.
That's it for now...
... have a great weekend.