11/01/24 Afternoon CommStock Report – Calm Before the Storm?

If judged by the mostly weaker-trending volatility measures, grain and livestock traders are discounting the risks of any major surprises that could pop up next week. Lower volatility premiums may still incentivize hedging with futures and options ahead of the three big events – election on Tuesday, Federal Reserve Bank decision on interest rates Thursday, and the November crop report on Friday. There could also be opportunities to react if volatility rises with big price moves in either direction; for example, re-owning upside exposure if a sharp selloff is deemed rash and overdone, or using a strong relief rally to advance crop sales.   After a consolidating, sideways trade for corn futures lately, the CME Group’s corn volatility index just scored a new six-month low. Soybeans, soy meal, and wheat futures currently all have volatility scores near the bottom of their six-month ranges; same for cattle and hogs. The only contracts reaching new highs on the volatility scale are soy oil futures. Most of the volatility readings peaked in May or June this summer (cattle a little earlier, in April). As a general takeaway, we can expect options with similar duration and strike position to be priced lower now than…