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Transcript

Daily Market Podcast Jul 6 · 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, July 6th.
• 0:07
  SPEAKER_00: Hope everybody had a great 4th July weekend.
• 0:09
  SPEAKER_00: We got a lot to talk about this morning.
• 0:11
  SPEAKER_00: Walking in today, we've got December corn up 13 cents at 454 and a quarter.
• 0:16
  SPEAKER_00: We've got November beans up 33 and a half at 1181 and a half.
• 0:21
  SPEAKER_00: August crude is unchanged at 6870.
• 0:25
  SPEAKER_00: Start with corn this morning.
• 0:27
  SPEAKER_00: The corn market is higher, excuse me, on U.S.
• 0:30
  SPEAKER_00: weather forecast.
• 0:32
  SPEAKER_00: Beginning this upcoming weekend, a high pressure system builds over Colorado, Kansas area.
• 0:38
  SPEAKER_00: And then we go into a two-week period of hot dry weather.
• 0:42
  SPEAKER_00: And that will be right in the middle of corn pollination.
• 0:45
  SPEAKER_00: And speculators are short a lot of corn somewhere in the neighborhood of 100,000 contracts this morning.
• 0:51
  SPEAKER_00: And let's not forget that the U.S.
• 0:53
  SPEAKER_00: corn crops are, I'm sorry, not US, the EU corn crops are getting hammered by hot, dry weather for the last several weeks.
• 1:01
  SPEAKER_00: I've got a chart at the bottom of page one showing French corn crop ratings.
• 1:06
  SPEAKER_00: It's the only country in Europe that releases this data, and by the way, they're the largest corn producer in Europe.
• 1:15
  SPEAKER_00: The crop ratings have cratered the last two weeks, and they are now the lowest crop rating in 10 years.
• 1:22
  SPEAKER_00: That corn crop in France was 16% pollinated as of last Friday.
• 1:27
  SPEAKER_00: So France goes uh into their pollination time period being bone dry with a hot, dry weather forecast going forward.
• 1:37
  SPEAKER_00: Not good.
• 1:38
  SPEAKER_00: But I don't think the market is really worried about France right now.
• 1:42
  SPEAKER_00: I believe the market should be concerned about France because this directly impacts U.S.
• 1:47
  SPEAKER_00: corn export demand.
• 1:49
  SPEAKER_00: But this morning the market is much more focused on U.S.
• 1:52
  SPEAKER_00: weather.
• 1:52
  SPEAKER_00: And we all know weather forecasts can change, and they will change 100 times before we get to next weekend.
• 1:59
  SPEAKER_00: But this morning, uh, we have this forecast that we have to deal with.
• 2:05
  SPEAKER_00: I'm still longer-term bullish CBOT corn.
• 2:08
  SPEAKER_00: We need to closely watch this weather.
• 2:11
  SPEAKER_00: If we do end up being hot and dry the next several weeks, the market will continue to rally to continue to rally, sorry, and speculators will blow out of their short positions.
• 2:21
  SPEAKER_00: If you remember back to arguments that we were making two months ago, we stated that this year was a year that we have zero room for corn crop issues.
• 2:30
  SPEAKER_00: Well, as of this morning, we have crop condition crop issues in the U.S.
• 2:34
  SPEAKER_00: and the EU that we have to work with.
• 2:37
  SPEAKER_00: Moving on to soybeans, um, the soybean market, not only do we have hot, dry U.S.
• 2:44
  SPEAKER_00: weather forecasts, but we also have the Chinese that continue to check soybean prices at U.S.
• 2:50
  SPEAKER_00: ports.
• 2:51
  SPEAKER_00: And late last week, the Chinese Minister of Commerce stated that China needs to lower or possibly remove tariffs on U.S.
• 3:00
  SPEAKER_00: soybeans.
• 3:01
  SPEAKER_00: This was fully discussed during Trump's last meeting in Beijing, but China just never followed through.
• 3:07
  SPEAKER_00: So the soybean market today is worried about U.S.
• 3:10
  SPEAKER_00: weather and is somewhat hopeful for some Chinese business.
• 3:15
  SPEAKER_00: But China is obviously dragging their feet.
• 3:19
  SPEAKER_00: Meanwhile, we do have China uh continuing to push its military vessels closer and closer to Taiwan.
• 3:28
  SPEAKER_00: It's almost like they're testing to see what the Taiwan or U.S.
• 3:32
  SPEAKER_00: military will do in response.
• 3:34
  SPEAKER_00: So we really don't know how this is going to end.
• 3:37
  SPEAKER_00: I remain in the camp that rallies in CBOT soybeans should be sold.
• 3:41
  SPEAKER_00: But I'm not interested in selling the first 40, 40 to 50 cent rally.
• 3:46
  SPEAKER_00: I think we give this market room to run here for a little while.
• 3:49
  SPEAKER_00: Moving on to weather, we have got a system up in Minnesota, Wisconsin area the next several days, and then another system that goes across, say, central Tennessee up towards uh Virginia, DC area.
• 4:03
  SPEAKER_00: Once that moves through, we've basically got two weeks of pretty open weather in the center of the country.
• 4:10
  SPEAKER_00: And I've got some maps on page two showing high temperatures on Saturday and Sunday.
• 4:16
  SPEAKER_00: We've got 100 degree uh temperatures from Texas all the way up to uh South Dakota area.
• 4:22
  SPEAKER_00: They build and stay there for several days starting this weekend.
• 4:26
  SPEAKER_00: And then once we get into early next week, those high temperatures migrate east into parts of Iowa and um uh Missouri.
• 4:35
  SPEAKER_00: And then on the bottom of page two, I've got a chart showing where this high pressure system is setting up next Monday.
• 4:42
  SPEAKER_00: It's basically centered over uh eastern part of Colorado, western Kansas area.
• 4:47
  SPEAKER_00: So this is something that we really need to keep an eye on.
• 4:51
  SPEAKER_00: Thanks for listening.
• 4:52
  SPEAKER_00: We'll be back tomorrow.