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Transcript

Daily Market Podcast Aug 31 · 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, August 31.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is down a penny at 534.
• 0:11
  SPEAKER_00: November soybeans are down six at 1281 and a half.
• 0:14
  SPEAKER_00: December meal is down 290 at 346.
• 0:17
  SPEAKER_00: And October crude is back higher this morning of 280 at 86.20.
• 0:23
  SPEAKER_00: First off, when you talk about Russian Ukraine, Russia seems to be taking steps to intensify their attacks on Ukraine.
• 0:32
  SPEAKER_00: Last week we saw North African nations hit the panic button and buy a lot more wheat very quickly from the EU, largely from France.
• 0:43
  SPEAKER_00: And this is an effort to replace the wheat that they were getting from Russia and Ukraine.
• 0:48
  SPEAKER_00: And the lack of export flows, of all grain export flows from Russia and Ukraine, caused an 85 cent rally in Chicago wheat last week.
• 0:58
  SPEAKER_00: And CBOT corn and soybeans followed wheat higher.
• 1:04
  SPEAKER_00: As far as corn news this morning, last week we saw speculators buy an absolute mountain of CBOT grains.
• 1:12
  SPEAKER_00: This included 150,000 contracts of corn, 50,000 contracts of wheat, 90,000 contracts of soybeans.
• 1:20
  SPEAKER_00: They also bought some meal and oil.
• 1:22
  SPEAKER_00: Last week we'll go down as one of the biggest weeks of speculator buying that we have ever seen.
• 1:29
  SPEAKER_00: So we walk in this morning as speculators have the biggest combined long position in CBOT grains, corn, wheat, beans, meal, oil, the biggest long position ever in history.
• 1:43
  SPEAKER_00: I've got a chart of this on the bottom of page one.
• 1:46
  SPEAKER_00: I argued late last week that CBOT corn may be high enough for now, and I still believe that.
• 1:52
  SPEAKER_00: With U.S.
• 1:53
  SPEAKER_00: harvest right in front of us and this massive speculator buying that just occurred, who else is going to buy CBOT corn at these prices after we just rallied 80 cents in three weeks?
• 2:05
  SPEAKER_00: Speculators, they might buy more, not ruling that out, but just not at this pace.
• 2:11
  SPEAKER_00: We just what we just witnessed was unprecedented.
• 2:15
  SPEAKER_00: So now what?
• 2:16
  SPEAKER_00: Well, the latest weather models have more heat working its way back in the corn belt.
• 2:21
  SPEAKER_00: And Russia's efforts this morning look like they're doing everything to continue to shut off grain from the Black Sea.
• 2:28
  SPEAKER_00: Both of those data points are bullish.
• 2:30
  SPEAKER_00: But this morning, Chicago wheat is down 12 cents, Chicago corn is down a penny.
• 2:37
  SPEAKER_00: If a market has bullish news and it cannot rally, it tells you that you already have a lot of bullish factors already priced in this market.
• 2:46
  SPEAKER_00: And let's not forget, USDA will have its next crop production report next Wednesday, September 12th.
• 2:53
  SPEAKER_00: It feels like the corn market may have rallied about all it can for right now.
• 2:58
  SPEAKER_00: And I think this market is just going to wait on the USDA report next week and see if this crop is really as bad as the market is expecting it to be.
• 3:09
  SPEAKER_00: Moving on to soybeans.
• 3:11
  SPEAKER_00: This heat moving back into the corn belt is not good.
• 3:15
  SPEAKER_00: I've got maps of these high temperatures on page two.
• 3:20
  SPEAKER_00: As of this morning, we estimate that two-thirds of the soybean acres in the United States are short soil moisture.
• 3:28
  SPEAKER_00: Heat on a dry crop at this time of year is quite obviously a recipe for a crop maturing faster than normal.
• 3:35
  SPEAKER_00: And that clearly ain't good for yields.
• 3:38
  SPEAKER_00: However, if you look at the low price on October 11th to the last price this morning, November soybeans have rallied$1.20.
• 3:49
  SPEAKER_00: So we clearly already have a smaller crop already priced in this market.
• 3:53
  SPEAKER_00: I think this weather is certainly supportive and it may keep soybean prices from breaking much, but I'm not sure that we can continue to rally much more, not right now.
• 4:03
  SPEAKER_00: Not with a big USD report coming next week.
• 4:07
  SPEAKER_00: On the bottom of page one, I've got a chart of speculator positions and Chicago grains.
• 4:12
  SPEAKER_00: It's worth taking a look.
• 4:13
  SPEAKER_00: It's a new all-time record this morning.
• 4:15
  SPEAKER_00: Again, I just don't think we can see this buying continue at the not at this pace.
• 4:22
  SPEAKER_00: Um as far as weather forecast, uh, as far as precip, uh, we've got some light-scattered uh systems coming across the far northern cornbelt, um, Wisconsin into Michigan this week, and then over the weekends, again, some more light-scattered stuff.
• 4:40
  SPEAKER_00: But the heart of the Corn Belt really doesn't get a lot of moisture, but you have got some smoking hot temperatures coming back in.
• 4:48
  SPEAKER_00: Um starts today and certainly intensifies um into the middle and end of this week.
• 4:56
  SPEAKER_00: And you're gonna have some 100 to 105 degree temperatures uh in Missouri and Iowa the next several days.
• 5:05
  SPEAKER_00: That's just not gonna be good uh for maturing crops whatsoever.
• 5:09
  SPEAKER_00: So, anyway, that's it for today.
• 5:12
  SPEAKER_00: Thanks for listening.
• 5:13
  SPEAKER_00: We'll be back tomorrow.