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Transcript

Daily Market Podcast Jun 1 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Monday morning, June 1st.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is unchanged at 475.
• 0:10
  SPEAKER_00: November beans are up four and three quarters at 11.94 and three quarters.
• 0:15
  SPEAKER_00: July crude is up 280 at 90.20.
• 0:19
  SPEAKER_00: As for corn news this morning, uh crude oil sold off again Friday.
• 0:23
  SPEAKER_00: Corn followed it lower.
• 0:25
  SPEAKER_00: It seems that speculators have been getting smaller the last two weeks in total CBOT grain positions.
• 0:33
  SPEAKER_00: According to the latest data of the CFTC report on Friday, speculators have sold over 90,000 contracts of corn last week, and that makes a total of 140,000 contracts the last two weeks.
• 0:46
  SPEAKER_00: That's been most of the downside pressure.
• 0:49
  SPEAKER_00: Speculators liquidated alongs in wheat and the soy complex as well, not just corn.
• 0:55
  SPEAKER_00: Meanwhile, China was back in buying corn Thursday and Friday in Argentina.
• 1:00
  SPEAKER_00: We believe that China has now purchased a little bit over a million tons, one million tons of corn from Argentina.
• 1:06
  SPEAKER_00: Likely, like we reported last week, this is a big deal.
• 1:11
  SPEAKER_00: Clearly, China needs the corn.
• 1:13
  SPEAKER_00: I find it very interesting that the Chinese government reported that they harvested a record large crop last fall.
• 1:20
  SPEAKER_00: But somehow they need to import corn today, just six, seven months after they harvested this crop.
• 1:27
  SPEAKER_00: Something seems a bit off with that combination.
• 1:30
  SPEAKER_00: First, let's be honest, we really don't know if the crop data reported by the Chinese government is correct or not.
• 1:37
  SPEAKER_00: Shocker, I know, right?
• 1:39
  SPEAKER_00: But we can clearly argue that if commercial elevators uh are buying and importing corn today, they clearly have a need for it.
• 1:49
  SPEAKER_00: So again, this goes towards the point if and when the$17 billion ag deal gets underway with China, buying U.S.
• 1:58
  SPEAKER_00: corn should be very high on the list of those commodities.
• 2:03
  SPEAKER_00: Uh, but along those fronts, nothing new on China as of today.
• 2:08
  SPEAKER_00: Meanwhile, USDA will issue its first U.S.
• 2:11
  SPEAKER_00: corn crop condition rating this afternoon.
• 2:13
  SPEAKER_00: We expect the percentage rated good to excellent to be somewhere between 68 and 70 percent.
• 2:20
  SPEAKER_00: This is the crop rating that the market watches closest.
• 2:23
  SPEAKER_00: Percent rated good to excellent.
• 2:25
  SPEAKER_00: We'll be quoting that each week going forward.
• 2:28
  SPEAKER_00: I continue to believe that CBOT corn will be well supported.
• 2:31
  SPEAKER_00: I will say that this spec liquidate spec liquidation has somewhat caught me by surprise the last couple of weeks.
• 2:38
  SPEAKER_00: Longer term, I remain bullish CBOT corn.
• 2:43
  SPEAKER_00: On to soybeans, uh last week we reported that um on this potential palm oil export restrictions by Indonesia.
• 2:52
  SPEAKER_00: Well, Friday, there was news out that Indonesia is moving towards an export tax.
• 2:57
  SPEAKER_00: This set global vegetable prices higher, including soybean oil.
• 3:02
  SPEAKER_00: Meanwhile, in the U.S., renewable diesel production margins are record high.
• 3:08
  SPEAKER_00: Today, renewable diesel plants can pay 82 cents a pound for bean oil and still make money.
• 3:15
  SPEAKER_00: The largest renewable diesel plants, uh, the largest two or three, are reportedly running at somewhere near 90% of capacity.
• 3:25
  SPEAKER_00: So U.S.
• 3:26
  SPEAKER_00: bean oil prices remain firm.
• 3:28
  SPEAKER_00: Meanwhile, as for soybean meal, we are beginning to question our export pace going forward.
• 3:34
  SPEAKER_00: Yes, we have lots of meal sold for export, but prices in Argentina and Brazil are falling, and soybean meal exports are picking up in both locations.
• 3:44
  SPEAKER_00: Matter of fact, Brazil's meal exports for May likely ended up uh being a new record large for the month.
• 3:52
  SPEAKER_00: Brazilian crush pace is really big, and everything looks like this summer Brazil may actually take over Argentina as the world's largest meal exporter.
• 4:04
  SPEAKER_00: That will be for the first time ever.
• 4:06
  SPEAKER_00: Argentina has had that title for decades.
• 4:11
  SPEAKER_00: So, kind of a conundrum this morning that global soybean meal import demand is still very big, but we may see South America begin to steal some of our meal export demand out of the U.S.
• 4:25
  SPEAKER_00: If we begin to lose some of that export demand, U.S.
• 4:29
  SPEAKER_00: meal prices uh will decline.
• 4:31
  SPEAKER_00: As for the near-term outlook, outlook for CBOT soybeans, the market will still be driven by a combination of things in the near term, ceasefire implications with Iran, bean oil prices, if they continue to go up or they steady out here, and news on China.
• 4:51
  SPEAKER_00: And as far as China, there is nothing new uh at this point.
• 4:56
  SPEAKER_00: I still believe that CBOT soybean prices will be well supported in the short term.
• 5:01
  SPEAKER_00: Uh, if we get something done with China, we would be bullish very quickly.
• 5:08
  SPEAKER_00: As far as weather, uh the next three, four days, um there, matter of fact, Tuesday through Thursday specifically, there's a pretty decent rain event coming through Kansas, Nebraska, South Dakota.
• 5:21
  SPEAKER_00: This is their best chance of rain that they've had in a long, long time.
• 5:26
  SPEAKER_00: Um, and hopefully, if these rains do materialize, uh, they desperately need it.
• 5:31
  SPEAKER_00: This is not a drought stopping rain, but it takes them a long way towards that.
• 5:36
  SPEAKER_00: Meanwhile, I've got a uh uh map on page two of the drought areas of the U.S.
• 5:44
  SPEAKER_00: uh soil moisture map, and you can see from the last time that I published this map a week and a half ago, the drought areas in the south have greatly diminished.
• 5:55
  SPEAKER_00: That's because they've had two weeks of very heavy rains from Texas across to the Carolinas.
• 6:02
  SPEAKER_00: So um we'll look for USDA's report this afternoon and see what that tells us as far as crop ratings.
• 6:08
  SPEAKER_00: That's it for today.
• 6:09
  SPEAKER_00: Thanks for listening.
• 6:10
  SPEAKER_00: We'll be back in the morning.