Grain trade in the dark without monthly USDA crop report
With that, Chicago Board of Trade futures markets have seen market volatility slip despite steady trading volume, which traders attribute to big grain companies and country elevators hedging the harvest of a bumper U.S. crop.
One measure of market activity, or volatility, is average true range which measures the daily high-low price of a commodity. Average true range volatility, developed specifically to track commodities, shows CBOT December corn futures volatility now at its lowest level since late March.
The lack of USDA data "probably has subdued trade somewhat," said Dan Cekander, director of grain market analysis for Newedge USA in Chicago.
However, he added, trading volume has been relatively steady, bolstered by the annual U.S. corn and soybean harvests that trigger hedge-related selling by farmers, commercial grain handlers, end-users and speculators.
Typically, market volatility peaks on the days when USDA releases its monthly and quarterly crop reports. The releases are often accompanied by limit price moves in CBOT grain futures as traders and analysts reset their working balance sheets against the milestones supplied by USDA.
The longer the trade goes without official government numbers, the greater the risk of the market drifting off course.
"Once USDA is up and going and they open the flood gates with data - what's that going to do to the markets?" said Collins of Trilateral. "If it comes out as expected then it won't be a problem. If not, it could be chaotic for awhile."