Sometimes when commodity prices have been falling for what seems like forever, the markets will suddenly turn upwards and give farmers an unexpected opportunity to sell their crops at a slight profit.
That short-term recovery is often called a dead cat bounce, referring to what happens if you drop a dead cat off the side of a grain bin, metaphorically speaking. It will bounce; it won’t go very high, but it will bounce.
“I believe we’re going to see a dead cat bounce in the price,” said Milo Hamilton, co-founder and senior economic analyst for Firstgrain, Inc. “By that, I mean it could go much higher. It did the same thing in 2009 – I was on top of that. In that dead cat bounce coming off of those prices, it went up to $16 per hundredweight.”
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If, as some observers are predicting, U.S. rice farmers plant 20% to 30% fewer acres of rice in 2021; Brazil’s drought continues; and China’s feed demand for rice keeps growing, U.S. rice prices could begin to rebound later this year.
That’s several ifs, but Milo Hamilton, co-founder and senior agricultural economist for Firstgrain, Inc., says that’s how the price situation may begin to play out for U.S. growers who face an explosion in soybean prices.
“If you look at the broad sweep of commodities, the big mover has been gold,” said Hamilton, who spoke during the Rice Marketing Educational Seminar at the Mid-South Farm and Gin Show, which was held virtually this year. “The second biggest mover and the biggest for grains has been soybeans.