Volatility was the headline in the commodity markets this week. From fears Russia was invading Poland to then news the U.N. Grain Deal would be extended, the commodity markets saw extremes.
Tommy Grisafi of Advance Trading says the Russia and Ukraine conflict news did have a hand in the price extremes, but reason was the fact December options on the Board of Trade expire next week.
“It is the largest open interest of all the options series,” says Grisafi. “So, it doesn’t surprise me that corn rallied 25 cents off the low of the day, because there’s a bunch of people short calls or with positions who never thought we’d go there. And two minutes later, they think we’re on the verge of World War III, which didn’t happen, but it’s still something that was talked about. So incredible volatility is all that open interest in December options have to be unwound.”
DuWayne Bosse of Bolt Marketing says the thing to watch in the next month is the possibility of a South American weather scare.
“We’re not far off that possibly. I’m definitely not a weatherman, but they’ve been spoon fed moisture the last three months getting just enough to keep going, especially in Argentina and La Nina has been announced this last week, that will continue on into January, which should keep them on the drier pattern. So everything looks okay right now, but if you get a weather scare in South America with our tight U.S. stocks up here for all three grains, this thing could get pretty wild yet.”
