CBOT Grains Daily Options Report
Recap of day's options activity and data.
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- Grains & Oilseeds
Perspective: Mid-Day Commentary for February 19
By: Arlan Suderman, Chief Commodities Economist
February 19 – Stocks remain in the red at mid-day, with the Dow Jones leading the way lower, followed by the Nasdaq, then S&P 500 amid concerns of a divided Fed and rising geopolitical risks. Uncertainty appears to be creeping back into the minds of Wall Street traders, with the VIX rising back above the 20-mark today after dipping to a six-day low just below 18.5 yesterday. The dollar is extending yesterday’s gains as this morning’s economic data continues to point to a more resilient than expected U.S. economy, weakening the doves’ case, especially in the context of an already skeptical FOMC (more on that below). Treasuries are trading just above unchanged at the time of writing, with 10-year yields at 4.085% and 2-year yields at 3.470%. Crude oil prices are continuing to spike as the buildup of military assets in the Middle East carries on and weekly U.S. fundamental data comes in much tighter than expected, pushing nearby WTI to a fresh six-month high just below the $67/barrel mark earlier in the session. The ags are largely mixed, with the wheat complex leading the way higher on a combination of the aforementioned geopolitical risk, especially with Russia’s potential tie-in to the U.S./Iran tensions, as well as worsening forecasts in major winter wheat producing regions, all taking place amid sizable net managed money shorts.
The minutes from the FOMC’s January meeting that were released yesterday afternoon point to a divided Fed in 2026—no surprise given the upcoming change of leadership as current Fed Chair Jerome Powell’s term ends in May and Kevin Warsh takes over. Despite political pressure for lower rates, several Fed officials appeared notably hawkish, with some pushing for a “two-sided” final statement to reflect the possibility of needed rate hikes if inflation remains at above-target levels. In the end, the Fed’s final statement from the January meeting remained one-sided, focusing only on whether or not there would be more cuts. We’ll get an update on the Fed’s preferred inflation metric, the PCE, tomorrow. As a reminder, headline PCE has been above the Fed’s 2.0% mandated level for nearly five straight years now, as has headline CPI; this doesn’t support additional rate cuts. On the other side of the Fed’s dual mandate, the U.S. labor market has continued to prove more resilient than expected, as evidenced by another lighter than expected week of jobless claims reported this morning; that doesn’t support additional rate cuts either. Fed officials were also notably more optimistic about the labor market than previously in 2025, with the minutes saying, “the vast majority of participants judged that labor market conditions had been showing some signs of stabilization and that downside risks to the labor market had diminished.” Others did continue to point to downside risks remaining, especially in a “low-hiring environment,” again highlighting the growing internal divide.
CME’s FedWatch tool still points to market expectations of the Fed’s next rate cut coming at their June meeting, which will be the first under the new leadership, though the probability of such a cut did fall following the release of the minutes yesterday. The highest odds are for a total of two 25-basis point cuts by the end of 2026, which would bring the Fed’s target rate to 3.00% - 3.25%. Look for significant debate among FOMC members to be a central theme hanging over the broader markets in 2026, especially in the latter half of the year.
Pending home sales fell 0.8% month over month in January, sharply missing analyst expectations of a 1.3% month-over-month rise. December’s ugly drop was revised from the -9.3% originally reported up to -7.4%, though that still represents the worst monthly decline in home sales seen since April 2024 as the housing market remains relatively tepid. In year-over-year terms, pending home sales fell 0.4% in January, with notable declines seen in the Northeast (-8.3%) and Midwest (-3.3%) while the West (+0.3%) saw small gains and the South (+4.0%) saw the largest increase. Despite falling mortgage rates, with the national average 30-year rate falling to 6.09% in this morning’s update from Freddie Mac, National Association of Realtors Chief Economist Dr. Lawrence Yun noted that “improving affordability conditions have yet to induce more buying activity.” Yun also pointed to the need to increase housing supply due to the potential for a notable uptick in buyers stepping forward in 2026 which could drive home prices up further.
U.S. crude oil stocks fell by 9.01 million barrels week-over-week in the week ended 2/13, dramatically sharper than the expected 2.149-million-barrel increase expected by analysts and marking the largest weekly decline seen in five months. This puts total U.S. crude oil stocks, excluding the SPR, at 419.82 million barrels, the lowest level of 2026 thus far. This surprisingly bullish data adds to an already red-hot crude oil market amid rising tensions between the U.S. and Iran, driving WTI to a six-plus month high at mid-day. Throw in the potential tie-in to the Russia/Ukraine conflict with Iran and Russia continuing to conduct joint naval drills in the region today in response to the ongoing buildup of U.S. military equipment in the theater, and the risk to global crude supply looks even broader. Elsewhere in today’s DOE report, refined products also saw much sharper than expected draws, with U.S. gasoline stocks falling 3.213 million barrels week-on-week versus estimates of a much lighter 0.284-million-barrel drop, and distillate stocks falling 4.566 million barrels week-on-week versus estimates of a 1.440-million-barrel drop. Refinery utilization also jumped much sharper than expected, up 1.6% week-on-week to a four-week high of 91.0%, well above the estimated 0.4% weekly uptick.
- Grains & Oilseeds
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