CROPS

The futures markets are always keen to respond to dramatic events and ideas, usually exaggerating the effects, occasionally well beyond any conceivable reality. Still, at this point the markets have so far reacted to the drama in the Ukraine's Crimean Peninsula in a relatively orderly fashion, although the discussion about the actions of Russian President Vladimir Putin is dominant at the coffee shop.

It is quite clear that President Putin desires to control the seaport at Sebastopol, which is a big deal for the short-run with regard to exports of Ukraine's grains, since that region is a major producer and exporter of wheat and corn.

The potential disruption of export grain loading operations is the heat under the wheat for the last few days of trade. May Chicago futures jumped from last Friday morning's opening price of $5.90 per bushel to Tuesday's close at $6.43½, a nice, three-day 50-cent move.

As things go, this is not a massive price move (yet), but even the casual observer can see the market is nervous and twitchy. Another 50 cents up is well within the conceivable price range that could be generated by news of Russian troop movements and/or confrontations. A speculative trader in this arena will have to be very nimble, as there is also a poten­tial 50-cent giveback to the downside if the market perceives a political resolution.

This is less like business trading and more like gambling on the outcome of a chess match, with an acknowledged master on one side and a disarrayed committee on the other. The open question being how messy it may become.

The background to the Russian-Ukrainian interlude in­cludes wheat crop condition declines in the Midwest, with key hard red winter wheat-producing states Nebraska, Okla­homa and Kansas all seeing declines of 1-5% in crop ratings released by USDA in the last week. Corn prices reached their highest closing price since last August on Tuesday. Soybeans are also in an up-trending pattern at higher levels than any since last June, and the official crop size estimates for Brazil­ian soybeans coming to harvest are shrinking.

For wheat, the sum of the parts remains positive, along with the trend line, although the move is maturing, now more than 23 trading days since the low of the last day of January. Many common short-term upward chart-based technical price targets for Chicago wheat have already been achieved. Volatility has increased, increasing the short-term risk of a swift, 20-30 cent decline for traders or wheat owners try­ing to achieve a sale, even in the context of a strong upward tendency.

Emergence from winter dormancy for Northern hemi­sphere wheat, very soon at hand, will bring detail to the picture of wheat crop size. The spring weather season is a more volatile price period due to the vulnerability of small wheat plants.

The upward price movement of all grains is now at least a month old, a common maturity point at which pull-backs and consolidation often emerge, even in the mid-course of a large-scale move up. This is not a slow and steady tortoise markethellip;more like a March hare, potentially swift and er­ratic. Let's be careful out there.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.