Wheat Market Volatility Leads to Almost $7 Spread

LUBBOCK, TX – Extreme volatility is plaguing the wheat market, in part due to the war in Ukraine and the extreme dry conditions across the hard red winter wheat (HRW) belt. Over the past 52 weeks, HRW has experienced a $6.84 spread from low to high (July 2022 contract $5.75¼ to $12.59).

Bob Maurer is with Manduca Trading in Chicago, IL, and says “you should have a lot of respect for the unknown”. When considering historical perspective, there’s just not much to reply on he explains but since the data points move so quickly, it adds uncertainty which breeds volatility.

At this point, there is a justifiable concern of some kind of delay in availability, based upon whether Ukrainian farmers will be able to sow a spring wheat crop, and whether they can harvest a winter crop. The delays could sprout from a lack of on-farm fuel, availability of harvesting equipment and whether parts for repairs will be available, and the infrastructure needed to store and export the crop.

In addition, other global customers appear to be preparing for the future as China dealing with a poor winter wheat crop, will begin to limit their reliance and may start to focus on increasing their planted acreage.

So how will producers deal with the wild springs? Maurer says he looks toward options markets but considers some resistance at $13.40 to $13.45 per bushel, but also cautions that anyone doing so needs to remember that trading is high risk and can cause a complete loss of your funds.

Click here to listen to Maurer’s market commentary.
(SOURCE: All Ag News)