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Is ag market volatility picking up, at last?

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Is there hope in sight for investors hoping for a bit of ag market volatility?


Broker Benson Quinn Commodities was the latest to note the challenge the appeal of grain markets marked by “ample world grain and soybean supplies, little volatility and markets… trading at multi-year lows”.


This when, “over in the equities, the US stock markets continue to make record highs”.


‘Gives faint hope’


But there are signs of prove movement ticking up a bit, in the corn market at least.


Tregg Cronin at Halo Commodity Company said that, “fortunately, the last several sessions have witnessed option volatility begin to climb”.


In the options market, where volatility is a key price input, “December corn volatility settled yesterday at 14.37% vs. 12.86% last week”.


This rise “at least gives the faint hope we might move out of our [corn price] ranges some day”. December corn futures have for more than two months trod a narrow corridor around $3.40-3.50 a bushel in Chicago.


Bigger price swings would be welcomed notably by trading houses, many of which have complained of the difficulty of making a turn in markets which insist on going pretty much in a straight line.


Mixed blessing


That said, he added that for Chicago soft red winter wheat, volatility “is essentially unchanged at 16.89%”.


It is also to be remembered that a lack of volatility is welcomed by many market users, making planning much easier.


Still, whatever producers may be planning at current prices, which are below production costs for many (outside the former Soviet Union)…

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