International Investing

From the Daily Reckoning:

…Before long, the pit was a frenzy. All of a sudden, I heard traders yelling, “21 bid, 22 bid, 23 bid,” meaning that the traders were trying to buy wheat at $20 per bushel. In order for a transaction to take place, another trader must be willing to sell at whatever price someone is bidding.

I was second-guessing my own ears. Wheat was ticking up, or being bid up, by the DOLLAR! Now, each futures contract represents 5,000 bushels of wheat. So a $1 move in the price of wheat equates to a $5,000 move per contract.

Before this crazy bull market started, wheat ticked by quarter cents and pennies, with the occasional two-cent tick. These past few weeks had been marked by nickel and dime ticks, which would have seemed ridiculous six months ago. But in the rest of Monday’s trading, wheat was ticking by quarters, 50 cents, and dollars at a time…absolutely remarkable.

The market peaked at $25 per bushel, or a $5.75 rise in price from Friday’s close. We closed at $24 per bushel, a 25% single-day gain, marking the single biggest daily move in any agricultural market in the history of agricultural markets. If you were long, or had bought, 10 contracts at Friday’s close, you could have bought a nice house on the money you would have made in one day of trading.