Record Volatility and the Day Oil Broke the Market

A historic day of volatility in every major market saw crude oil again lead the news and traded in a massive $38-dollar a barrel range with which spilled over for 4% moves in several world equity indexes and key price and technical reversals in the corn, bean, wheat, and equity markets. The first part of the reversal was as much exhaustion as fundamental while the acceleration of the turnaround was President Trump calming the markets with an announcement the war was nearing an end. As quickly as it went up, we found that it could go down even faster. Prices go up on an escalator and down on an elevator, which was proven again today. Crude oil will continue to drive all market direction until a cease fire is announced and the Straits re-open. Continue to sell rallies, regardless of the reason.

News and Notes:

• There are no weather concerns of note in SA or the world which is allowing the grains and soy to follow the news from Iran and the Straits of Hormuz.
• The chart on Page 2 could be any daily chart we normally look at, but to highlight the insanity of the last week, I put in a 15-minute chart from Sunday night’s open until Monday’s close. Crude oil had a $38-dollar daily range which is a record for one day’s two-sided intraday trade and pulled and pushed every associated market along for the ride. The 41% daily move was as shocking to watch as it was hard to trade. Crude oil will continue to dominate all other market direction with the grains and soy heading in the same direction, while the world equity markets will head in the opposite direction.
• After the grain and soy markets closed at the CBOT at 1:15 central, the crude oil market fell sharply while the stock markets rallied sharply after an announcement around 2:00 by President Trump that the Iran war was nearing an end. Whether it was underestimation of Iran or the impact of the Straits of Hormuz closing, the markets got the entire administrations Sunday night when crude was $28 a barrel higher while the world equity markets were plunging to 2-3% losses that would have continued without a reversal in the oil market. The world economy is not on solid enough footing to support a “tax hike” at the pump and the President has no interest in the Republican party getting voted out of the majorities in November. There is a slippery slope between a safer world without Iran having nuclear capabilities and the pain the world is willing to absorb to accomplish that goal.
• The 2026 new crop corn Sales Target at $4.85 was hit in both Sunday and Monday’s rally to continue to reward the rally. This pushes new crop corn sales to 50% with all corn, bean, and wheat Sales Targets now On Hold. With today’s sharp pullback and a potential return to “normal” day-to-day volatility, call option strategies will begin to become more budget friendly against a low planted corn acres number and/or a summer weather issue. Currently, the volatility premium is making calls and puts about 10% more expensive than during regular market ranges.
• Many of you are fretting about not having enough bushels left to take advantage of the current rally. It is frustrating but there are a lot of costs in storing bushels and waiting for these type rallies. But considering storage costs (paid or on-farm), interest expense, opportunity cost of not having the cash and shrink, the costs mount up waiting on a rally. Conservatively figuring 3-cents per month for corn, storing for a year means you need a 36-cent rally just to break even. To date, the 2026 corn rally has been 16-cents. Patience in life is a virtue until it turns into inaction in your marketing plan.
• Cattle enjoyed the same wild roller coaster of volatility as futures for both live and feeders traded limit down in early trade before closing mid-range but still sharply lower. Other than box beef prices, several cracks are beginning to worry traders int eh structural bull market that has been going for 3-years+.

Today’s main news was easy to attribute to President Trump’s statement that Iran war is nearing completion, but since it came after our markets closed, expect more weakness in our markets tonight. No one expects a clean end to the war or the Straits re-opening, but today’s ridiculous volatility and nasty reversals shows what will happen to our prices when it ends. The Monday before the bombing started (2-weeks ago today), May corn futures price was $4.40 and today’s close was $4.53 with the 2-week high of $4.76 (last night). There is still premium to sell in all three markets but take today as a cautionary warning if you did not make any sales.