Electronic Trading at the CBOT for Wheat today swung from 1065.25 to 1334.50, a 269.25 point move or a 25.28% move in one day. To put this into perspective this is like the Dow starting at 10,000 and then hitting an intra-day high of 12,500. Can you imagine the Dow moving 25% in a day? Only in 1987 did a move like that happen in the US equity markets. The daily limits on Wheat were just lifted on Feb 25th so it is logical that the high - low band would increase but to increase to a 25% swing. Maybe the authorities that be will rethink the change to the daily limits in the Wheat market because it doesn't seem to be dampening the volatility in the market place and may even be contributing to an increase in volatility.
I am an equities guy, but for me there has to be some blood out there. To see commodities swinging like this must mean that there have to be some traders on the wrong side of this. Some of the wheat shorts have got to be getting carried out. I imagine that we will hear about some commodity fund 'blowing up' due to the swings in Wheat. Maybe even due to the swings in Wheat this week. Geesh 25% in a day! The leverage involved has to be thought about as well commodities can be bought with a 10% down payment, unlike in equities when you need to put down 50%. Maybe the commodities regulators will eventually look at that - the margin needed to put down. Amazing 25% swing in Wheat today, I can' get over that.
The Wheat information about the ECBOT came from:
http://futures.tradingcharts.com/intraday/ZW/38
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