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Transcript

Daily Market Podcast Sep 30 · 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 Wednesday, September 30th.
• 0:08
  SPEAKER_00: Walking in this morning, we got December corn up three cents at$5.25.
• 0:11
  SPEAKER_00: November soybeans are up six and a half at$13.04 and a quarter.
• 0:15
  SPEAKER_00: December meal is up$3.20 at$3.62.20.
• 0:20
  SPEAKER_00: And November crude oil is up$1.30 at$90.70 this morning.
• 0:25
  SPEAKER_00: Walking in this morning, the big news is USDA grain stocks report.
• 0:30
  SPEAKER_00: USDA will issue a September 1 grain stocks report this morning at 11 a.m.
• 0:36
  SPEAKER_00: Central Time.
• 0:37
  SPEAKER_00: I've got all the average market guesses listed on the bottom of page one.
• 0:41
  SPEAKER_00: This report is typically not a huge market mover.
• 0:44
  SPEAKER_00: There's usually not any big surprises, but occasionally USDA does shock us.
• 0:52
  SPEAKER_00: The one interesting fact on this report is the average market guests for corn are all over the place.
• 0:57
  SPEAKER_00: There's a very wide range, much more than the soybeans.
• 1:01
  SPEAKER_00: So the corn stocks number could cause some market volatility today.
• 1:05
  SPEAKER_00: Also, in this report, USDA has the right to revise last year's crop production estimates for corn and beans.
• 1:12
  SPEAKER_00: So that may or may not occur.
• 1:14
  SPEAKER_00: Flip a coin.
• 1:16
  SPEAKER_00: You never know about that one.
• 1:17
  SPEAKER_00: All right, as far as corn news, um, CBOT corn market did a whole lot of nothing yesterday.
• 1:22
  SPEAKER_00: The market was very much awaiting this USDA stocks number today.
• 1:26
  SPEAKER_00: Outside of this USDA report, the biggest market factor by far is this massive speculator long in corn.
• 1:34
  SPEAKER_00: This is a big risk.
• 1:36
  SPEAKER_00: The speculator will want and will need more bullish information to keep corn prices firm.
• 1:42
  SPEAKER_00: We're going into harvest.
• 1:44
  SPEAKER_00: U.S.
• 1:44
  SPEAKER_00: corn harvest should really pick up in the next week and beyond.
• 1:48
  SPEAKER_00: Historically, it's hard for a grain market in the United States to rally during the middle of harvest.
• 1:53
  SPEAKER_00: And the U.S.
• 1:55
  SPEAKER_00: corn export demand is diminishing, which we've talked about.
• 1:58
  SPEAKER_00: So if this stocks report is not bullish, then we could get a quick sell-off.
• 2:03
  SPEAKER_00: And there's one overwhelmingly true fact for the entire history of the corn market.
• 2:08
  SPEAKER_00: When speculators have a really big position and they start to exit, they get out of everything.
• 2:14
  SPEAKER_00: So if and when speculators start to sell and get out of their longs in corn, it could take them several weeks to get out of this massive position, and that could mean quite a sell-off.
• 2:25
  SPEAKER_00: I think this is a big risk we got to watch for.
• 2:28
  SPEAKER_00: As far as soybeans go, um, we really don't expect much out of the USD stocks report today.
• 2:34
  SPEAKER_00: Uh for soybeans, we don't expect it to matter much.
• 2:37
  SPEAKER_00: But there is a slight chance USDA could revise last year's crop, but again, that's anybody's guess.
• 2:43
  SPEAKER_00: Meanwhile, CBOT soybean meal prices are staying really strong at$360 and a little firmer.
• 2:51
  SPEAKER_00: That is very much due to slow crush rates in wet areas of the Western Corn Belt.
• 2:57
  SPEAKER_00: This has kept soybean harvest slow, and some crush plants in western areas are running out of beans.
• 3:03
  SPEAKER_00: Yesterday we saw spot bases for instant delivery trade a dollar over the November futures in some parts of Iowa.
• 3:11
  SPEAKER_00: And at the same time, you've got some parts of the eastern corn belt where more harvest is underway.
• 3:16
  SPEAKER_00: They had basis trading at zero, at even money with November yesterday.
• 3:21
  SPEAKER_00: This lack of soybeans in the West and slow crush is keeping soybean meal prices very firm.
• 3:28
  SPEAKER_00: Assuming harvest picks up in the next week, which it should, we could easily see soybean meal prices collapse in the coming two to three weeks.
• 3:37
  SPEAKER_00: Gulf soybeans remain the most expensive in the world, which we've talked about, so U.S.
• 3:41
  SPEAKER_00: soybean export demand is also declining.
• 3:44
  SPEAKER_00: So for the near term, without some bullish surprise from USDA today, CBOT soybeans look to be too high.
• 3:52
  SPEAKER_00: The path of least resistance could easily be lower in coming weeks.
• 3:56
  SPEAKER_00: Longer term, if South American crops end up being okay, we could see the March and May futures trade back under$12.
• 4:04
  SPEAKER_00: But that's a long ways out, and we have a lot of South American growing season in front of us.
• 4:10
  SPEAKER_00: As far as weather today, we've got the remnants of this uh hurricane that came across Mexico coming up into looks like eastern Texas, uh eastern parts of Oklahoma and Kansas in the next four to five days, and then it ship moves east uh very quickly into the southeast and the eastern seaboard uh early next week.
• 4:35
  SPEAKER_00: And then South America uh is really the big area to be watching.
• 4:40
  SPEAKER_00: And again, these uh two areas that have been shorted with moisture lately, the area of central Brazil, mainly Mato Grosso and areas to the east, and also central grain areas in Argentina that have been shorter moisture, both of those areas should be getting better moisture in the coming week, week and a half.
• 4:58
  SPEAKER_00: So that's not bullish whatsoever.
• 5:00
  SPEAKER_00: So you're really not you really today, if these forecasts hold true, you'd have no weather issues in South America.
• 5:06
  SPEAKER_00: So that's it for today.
• 5:08
  SPEAKER_00: Um, I will send an email out at shortly after 11 o'clock when the stocks report comes out and let everybody know what it says.
• 5:14
  SPEAKER_00: Have a good day.