Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Sep 14

Transcript

Daily Market Podcast Sep 14 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Monday morning, September 14th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is 5.30, which is unchanged on the day.
• 0:11
  SPEAKER_00: November soybeans are up three and a quarter at$12.99 and three quarters.
• 0:16
  SPEAKER_00: December meal is up 50 cents at 353.30.
• 0:20
  SPEAKER_00: October crude is up$3 at$103.10 this morning.
• 0:24
  SPEAKER_00: First thing before we get started on grains, we need to talk about China.
• 0:29
  SPEAKER_00: Over the weekend, U.S.
• 0:30
  SPEAKER_00: officials acknowledged that Chinese satellite images were used by Iran on their July 17th attack on the U.S.
• 0:39
  SPEAKER_00: military base in Jordan that killed three soldiers.
• 0:42
  SPEAKER_00: China is also, according to the reports, supplying more parts to Iran for their drones and missiles.
• 0:52
  SPEAKER_00: And this summer, Iranian missile and drone attacks became more and more accurate.
• 0:57
  SPEAKER_00: They believe this is largely due to better satellite images from China and better targeting components and parts from China.
• 1:06
  SPEAKER_00: All of this comes right before the September 24th, late next week meeting between Trump and Z at the White House.
• 1:15
  SPEAKER_00: So the obvious implications are for our grain markets, you know, will China agree to buy more U.S.
• 1:24
  SPEAKER_00: grains or not?
• 1:25
  SPEAKER_00: Well, this is obviously throwing a wrinkle into that equation.
• 1:29
  SPEAKER_00: As far as corn goes, let's begin with a big USDA report on Friday.
• 1:33
  SPEAKER_00: USDA lowered the U.S.
• 1:35
  SPEAKER_00: yield, U.S.
• 1:35
  SPEAKER_00: corn yield, for the second month in a row.
• 1:39
  SPEAKER_00: Their corn yield of 178.5 bushels per acre is clearly not as low as some expected.
• 1:46
  SPEAKER_00: But this pattern of lowering the yield in August and then again in September typically means the crop will continue to get smaller in future months.
• 1:56
  SPEAKER_00: We remain in the camp that U.S.
• 1:57
  SPEAKER_00: corn yield will eventually end up another two to three bushels lower.
• 2:01
  SPEAKER_00: And Matt, that means we are headed towards the smallest U.S.
• 2:05
  SPEAKER_00: corn stocks in at least four to five years.
• 2:08
  SPEAKER_00: Speculators are already loaded up long, waiting on this big rally that's yet to come.
• 2:15
  SPEAKER_00: So the CBFT corn market between now and the end of the year comes really comes down to three items that we need to watch.
• 2:22
  SPEAKER_00: Number one, does the U.S.
• 2:24
  SPEAKER_00: corn yield actually get smaller?
• 2:26
  SPEAKER_00: Number two, do we get a break during harvest or do we have any surprising information that makes speculators exit this big long position they have?
• 2:37
  SPEAKER_00: And number three, does the U.S.
• 2:39
  SPEAKER_00: export demand slow down or not?
• 2:42
  SPEAKER_00: We feel strongly that the U.S.
• 2:44
  SPEAKER_00: corn yield will get smaller, okay?
• 2:46
  SPEAKER_00: We would not be surprised if we get a harvest break.
• 2:49
  SPEAKER_00: And as for speculators, we really need to watch this U.S.
• 2:52
  SPEAKER_00: China meeting next week in Washington.
• 2:55
  SPEAKER_00: That could be good or bad.
• 2:56
  SPEAKER_00: That's flip a coin today.
• 2:59
  SPEAKER_00: As far as exports go, U.S.
• 3:02
  SPEAKER_00: exports should be slowing down, but they have not so far.
• 3:06
  SPEAKER_00: The summer here, we remain longer term, very bullish CBOT corn, especially in the spring and summer of 2027.
• 3:15
  SPEAKER_00: Between now and then, brakes are to be bought.
• 3:19
  SPEAKER_00: As far as soybeans go, USDA actually raised the U.S.
• 3:24
  SPEAKER_00: yield 0.1 bushels on Friday.
• 3:28
  SPEAKER_00: And their estimates for ending stocks seem relatively decent, what we know today.
• 3:33
  SPEAKER_00: Today, we assume a record large U.S.
• 3:37
  SPEAKER_00: crush rate, but USDA already has that in their numbers.
• 3:41
  SPEAKER_00: As for exports, that's really a very different equation for soybeans.
• 3:45
  SPEAKER_00: Last fall, China agreed to buy 12 million tons of U.S.
• 3:48
  SPEAKER_00: soybeans, and they've mostly done that.
• 3:51
  SPEAKER_00: They've almost finished with that.
• 3:52
  SPEAKER_00: So now what?
• 3:54
  SPEAKER_00: This market becomes ultra sensitive to how this Trump Z meeting goes next week.
• 4:00
  SPEAKER_00: Otherwise, U.S.
• 4:01
  SPEAKER_00: soybeans are too expensive and we lose business to South America.
• 4:04
  SPEAKER_00: And let's not overlook the fact that both Brazil and Argentina are expected to increase soybean plannings this season.
• 4:10
  SPEAKER_00: Then we have the Iran issue and super high fuel prices.
• 4:15
  SPEAKER_00: U.S.
• 4:15
  SPEAKER_00: diesel prices today are now amongst the highest ever reported.
• 4:20
  SPEAKER_00: And that's very supportive for bean oil.
• 4:23
  SPEAKER_00: So in other words, CBOT soybean prices over the next few months seem to be much more driven by political decisions than anything else.
• 4:32
  SPEAKER_00: We do need to still watch this finishing weather in the U.S., which today seems mostly okay, uh, in the corn belt, especially.
• 4:41
  SPEAKER_00: And we need to watch these upcoming crops in South America.
• 4:45
  SPEAKER_00: At the bottom of page one today, I've got charts on U.S.
• 4:50
  SPEAKER_00: corn ending stocks and where we think they're likely headed.
• 4:54
  SPEAKER_00: Uh, and the same for U.S.
• 4:56
  SPEAKER_00: soybean stocks.
• 4:58
  SPEAKER_00: And as far as weather goes, uh, we've got the system coming across the next several days across the center of the corn belt, giving them pretty decent moisture.
• 5:07
  SPEAKER_00: And then we follow up with kind of light scattered rains for for next week.
• 5:11
  SPEAKER_00: Um weather seems mostly okay for finishing soybean crops, uh, particularly in the heart of the uh the U.S.
• 5:19
  SPEAKER_00: Corn Belt.
• 5:20
  SPEAKER_00: The item that we do need to watch uh probably even more in the next several weeks is gonna be this massive area of dryness in South America, particularly central and northern Brazil.
• 5:34
  SPEAKER_00: Uh Mato Grosso, they can start planting soybeans tomorrow legally, but uh that area is bone dry, and farmers there are gonna be waiting on rains, and it looks like they're getting nothing for the next 10 days.
• 5:50
  SPEAKER_00: So if this doesn't change relatively quickly, we're gonna be off to a slow start in planting in Brazil.
• 5:57
  SPEAKER_00: As far as uh Argentina goes, they have begun planting corn.
• 6:01
  SPEAKER_00: Uh there late last week they were what, five and a half, six percent planted.
• 6:06
  SPEAKER_00: And they can use more rain in the heart of their grain belt in uh Santa Fe, Cordoba, and northern half of Buenos Aires.
• 6:14
  SPEAKER_00: So they need more rain also.
• 6:16
  SPEAKER_00: We need to watch both of those areas closely in the next coming weeks.
• 6:20
  SPEAKER_00: That's it for today.
• 6:21
  SPEAKER_00: Thanks for listening.
• 6:22
  SPEAKER_00: We'll be back tomorrow.