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Grain market volatility spikes as March contracts go into delivery

Grain futures saw large gains in overnight trading coming into Monday with corn and wheat up more than 25 cents and soybeans up more than 40 cents.

University of Missouri ag economist Ben Brown tells Brownfield the large upward swing isn’t a shock as February ends and the nearby contracts go into delivery…

“People don’t like to be exposed and so we saw people leave the markets Friday [and] cause the big drop; I think soybeans were down 70 cents on close on Friday,” he said. “Some of those people are now coming back.”

He said diminishing South American corn and soybean production estimates are already priced into the market and ongoing tensions between Russia and Ukraine are already priced into corn and wheat futures – limiting upside potential.

“The market had already built in a lot of the trade disruption in the Ukraine region when this war or spat started last week,” Brown said. “And I think that same philosophy holds for soybeans. It’s like, we could see a big run up instantly and people expecting movements in the markets only then to simmer back down.”

Brown said there is a lot of downside risk for grain futures if there is a resolve between Russia and Ukraine. Monday, March corn traded above $7, higher than it’s standard trading limit. Futures contracts can trade outside of their limits when in delivery.