One day ago, the president of Ukraine was urging citizens not to panic, while reports indicate that citizens were going about their normal lives in many areas of the country. It will take time to decipher whether the threat of invasion was truly being discounted.
The attack on Ukraine was a major factor affecting global markets on Thursday, in what some media are suggesting is the largest threat to Europe's security in 70 to 80 years. The attached chart highlights the percent change from the Feb. 23 close to the Feb. 24 high (blue bars) along with the day-over-day change from Wednesday's close to Thursday's close (brown bars).
Volatility is clearly seen in crude oil trade and spring wheat trade, with crude oil trading as much as 9.2% higher Thursday (blue bar) only to close .8% higher by the end of the session (April contract). March hard red spring wheat gained 9.9% this session to reach an $11 bushel (bu) high, only to close 2.9% higher by the end of the session.
The bars for soybeans and soymeal showed significant gains given up for a daily close in negative territory, the only contracts that failed to sustain early gains. The Canadian dollar reached its weakest trade in over one month although the exchange with the U.S. dollar strengthened late session to close at the high of the day. The Canadian dollar continues to diverge from the move in crude oil, with its historical correlation broken, with focus on the U.S. dollar as a safe haven in the event of global turmoil.
Surprisingly, North American equity markets showed weakness in previous trade due to the threat of war, while Thursday's trade saw late-session buying driving all major indices to a higher close. The S&P 500 shown on the chart gained 1.5%, while the TSX equity index posted a modest .09% gain.
Three crops that closed at or near session highs are palm oil, soft red winter wheat and hard red winter wheat, with SRW locked at its 50-cent daily limit while HRW closed within pennies of its daily limit. Data from this one day of trading shows some of the largest concerns directed at the wheat market, with the conflict between two of the world's largest exporters sure to disrupt export flows. Looking ahead, it is too soon to know how Ukraine producers will respond and are able to line up necessary financing and inputs to be in a position to plant another crop.
This is one snapshot in time from a story that could be a long and challenging one.
Cliff Jamieson can be reached at email@example.com
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