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John_Walter
Advisor

Rebound after catastrophe

Just posted Roy Smith's new column (click here), which seems timely on a number of fronts--earthquake in Japan, crop insurance deadline, and yesterday's USDA report. 

 

One of his insights:

 

"My experience with previous events such the disaster today is that prices rebound quickly after acting crazy for a day or two. If you need to make sales, you will probably get a chance some day next week to sell at a price higher than today’s close. A rebound is common. A target is half way back to the price before the event took place. There is no guarantee that the market will not go straight down. However, there is still the need for a big crop this fall."

 

Anybody resetting targets or anything like that after this week in the markets?

 

- John

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7 Replies
Santiago
Contributor

Re: Rebound after catastrophe

agree with that rebound, but i would suggest new target is less than half the losses, maybe 30% i will sale just what i need for the next 2 months........second part of the year i see long term good prices

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Jim Meade / Iowa City
Senior Advisor

Re: Rebound after catastrophe

I agree with Roy and I am not setting new targets.  Having said that, my question is whether the markets reacted only to the catastrophe or whether Japan's problems were simply a trigger or catalyst.  If the market is only reacting to a catastrophe, it will rebound soon.  If the market, like a hillside soaked in rain is ready for a mudslide, was also pressured by funds that would like to liquidate, worries about oil availability and prices, the disparity in the C-S ratio, China shifting bean purchases to SA, etc., then the market may settle down in some place other than a rebound.

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dapper7
Senior Contributor

Re: Rebound after catastrophe

after this washout, that was needed, we will see a very strong test of the recent highs if not new highs in corn,soybeans and wheat. and wheat would be the laggard. big markets-bigmoves. imho this will go on until june if not later. fasten your seat belts, this will be a bumpy flight. as always .fwiw

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protrader
Contributor

Re: Rebound after catastrophe

The markets will rebound.  Now is a good time, however to look at maybe some synthetic long positions.  (or if you have the capital to back it up, straight futures positions) I'd make sure I buy july expiry to allow time value, but I would expect mid to high seven's by july end.  that being said, maybe the route to go is dec'11 futures.  It seems that this catastrophe merely had people running for the exits-when combined with the recent march expiry, the drop in price was much more than even I expected.  As of this morning, I'm long 30 contracts of may corn so I have an interest here too (hopefully my thoughts are right. haha)

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viperkev
Veteran Contributor

Re: Rebound after catastrophe

Hi John,

I must be missing something here because the markets were dropping all week before the Japn earthquake!  Bigger S.A. soybean crop that was once touted as drought stricken. Rain in China and plains wheat. Corn that EVERYONE and their dog was bullish on. A USDA report Thurs. that was only bullish corn. I made enough on short wheat last week to be a normal yearly wage. Wheat should never have been at $9.00 or $10.00 with world supplies more then adequate.

K.

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ray h.
Senior Contributor

Re: Rebound after catastrophe

        What would a continuing drop in grain markets do for a supposed acreage battle?

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protrader
Contributor

Re: Rebound after catastrophe

oh gosh...different crops would come into the mix...soy already will have to compete with cotton in the southern states (pretty sure cotton will win) but I think we've hit price supports that ought to stand the test of time.

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