04/22/2024 The Case for Adding Some Weather Risk Premium Building

On the Grains Grains were mixed in overnight trade with corn and beans on the soft side but wheat prices firming as of 6am. Weekend news was dominated by both events and non-events in both DC and the geopolitical arena: The major event was House passage of $95 billion in 3 separate aid packages for Ukraine, Israel and Taiwan. It’s likely to clear the Senate easily but it happened only through Dem support that offset GOP opposition because the bills lacked any funding for U.S. border control and have Speaker Mike Johnson still facing criticism within the party. The major non-events making news are seemingly lessened risks of widening regional war with few signs either Israel or Iran want to trade blows again for reasons discussed below. That has oil prices quiet along with ideas OPEC+ has enough unused capacity to mitigate disruption of Iranian supplies. The Commitments of Traders report out after markets closed was somber news for those of us hoping this market will need to build in some weather risk and perhaps trigger more short covering by funds. It showed that through last Tuesday, those funds had actually been adding to already-large net short positions in all…