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Daily Market Podcast May 21 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Hey, good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter for Thursday, May 21st.
• 0:07
  SPEAKER_00: Walking in this morning, July corn is down a penny at 464 and three-quarters.
• 0:12
  SPEAKER_00: July soybeans are up a half at$12 and a quarter.
• 0:16
  SPEAKER_00: June crude is back higher right now, up$290 at$101.10.
• 0:22
  SPEAKER_00: Yesterday seemed to be all about crude oil.
• 0:25
  SPEAKER_00: Crude oil prices collapsed.
• 0:26
  SPEAKER_00: At one point they were down$750 yesterday, and this drug grain price is lower.
• 0:32
  SPEAKER_00: Then this morning we walk in, and there are uh headlines reporting that, and I quote, Iran's Supreme Leader ordered that near weapons grade uranium must stay in Iran.
• 0:46
  SPEAKER_00: So, you know, so much for Trump's idea of uh we're removing all of that, and crude oil prices rally$3.30 minutes.
• 0:55
  SPEAKER_00: So the White House may tell us over and over that this conflict with Iran is close to being done, but it certainly does not feel that way.
• 1:04
  SPEAKER_00: As for corn this morning, um weekly U.S.
• 1:08
  SPEAKER_00: ethanol production remains super strong.
• 1:10
  SPEAKER_00: As for corn exports, U.S.
• 1:12
  SPEAKER_00: prices remain well below Brazil and Ukraine, but Argentine prices have come down a little and are now cheaper than the U.S.
• 1:20
  SPEAKER_00: Gulf.
• 1:20
  SPEAKER_00: I've got a table in the report this morning uh showing these prices, these port prices and prices from all four origins U.S.
• 1:28
  SPEAKER_00: Gulf, Argentina, Brazil, and Ukraine.
• 1:31
  SPEAKER_00: Uh, all four origins going to uh U.S.
• 1:34
  SPEAKER_00: uh, I mean, sorry, going to the EU and Asia and uh U.S.
• 1:39
  SPEAKER_00: prices calculated going to China.
• 1:41
  SPEAKER_00: Um, I feel like U.S.
• 1:45
  SPEAKER_00: export demands should remain very strong, particularly being as Brazil uh is out of the picture, at least for the time being.
• 1:52
  SPEAKER_00: The last several years, by the time we get to August and their second crop corn harvest is well underway, Brazil has represented anywhere between 40 and 70 percent of all global corn trade.
• 2:07
  SPEAKER_00: They are the the big gorilla in the room.
• 2:10
  SPEAKER_00: Well, this year, that number is very likely gonna be much smaller than that, especially being with their drought damage second corn crop, and at the same time, corn-based ethanol production in Brazil is taking off.
• 2:24
  SPEAKER_00: Ukraine's unpredictable, depending on Russian attacks.
• 2:27
  SPEAKER_00: You don't know whether in a given month are they gonna be exporting corn or not.
• 2:32
  SPEAKER_00: So that keeps U.S.
• 2:33
  SPEAKER_00: corn exports very strong.
• 2:36
  SPEAKER_00: Also, in the table, I've got calculated U.S.
• 2:40
  SPEAKER_00: uh corn prices landed China.
• 2:43
  SPEAKER_00: Uh, U.S.
• 2:44
  SPEAKER_00: corn is very expensive landed China today because China still has a 10% import duty on U.S.
• 2:51
  SPEAKER_00: corn.
• 2:52
  SPEAKER_00: This is a big deal.
• 2:55
  SPEAKER_00: If China is going to uh going to take U.S.
• 2:58
  SPEAKER_00: corn as part of this$17 billion ag trade deal, then the first sign that the market will be looking for is that uh for for confirmation of this is that China removes this 10% import duty on corn.
• 3:12
  SPEAKER_00: If that happens, corn market race is higher.
• 3:16
  SPEAKER_00: So as for CBOT corn today, I feel like crude oil is gonna knee-jerk us around, but I think corn will be well supported on this break.
• 3:27
  SPEAKER_00: The outlook, my outlook for CBOT corn is steady to hire.
• 3:35
  SPEAKER_00: As for soybeans, uh China dropping the 10% import duty on soybeans is also a key point that the market is looking for.
• 3:42
  SPEAKER_00: With crude down so hard yesterday, bean oil suffered the biggest losses.
• 3:47
  SPEAKER_00: Meal was lower, but not nearly as bad as bean oil.
• 3:50
  SPEAKER_00: U.S.
• 3:50
  SPEAKER_00: meal demand remains super strong.
• 3:52
  SPEAKER_00: I still believe that CBOT soybeans and meal should trade mostly sideways in the near term.
• 3:58
  SPEAKER_00: But if and when we get some confirmation that China is back in buying U.S.
• 4:02
  SPEAKER_00: beans, then we rally.
• 4:04
  SPEAKER_00: Argentina crush is picking up, and so are their meal exports.
• 4:07
  SPEAKER_00: But global meal import demand is massive.
• 4:11
  SPEAKER_00: So U.S.
• 4:12
  SPEAKER_00: meal exports should stay big.
• 4:14
  SPEAKER_00: On a side note, there are more and more analysts leaning towards smaller U.S.
• 4:19
  SPEAKER_00: corn plantings than USDA estimated in March, and therefore larger soybean plantings, especially with soybean planting going so fast this year.
• 4:30
  SPEAKER_00: But this is an argument for much further down the road.
• 4:33
  SPEAKER_00: We just need to keep that in mind.
• 4:35
  SPEAKER_00: The charts for today, I've got uh we talked about these yesterday, uh, egg production in the U.S.
• 4:41
  SPEAKER_00: and uh chicks placed, roller chicks placed, both of them are well up from a year ago levels.
• 4:47
  SPEAKER_00: This keeps uh domestic feeding and meal demand up domestically.
• 4:53
  SPEAKER_00: For the weather maps today on page two, we keep the southern areas from Texas across um Mississippi, Alabama, Tennessee, all the way to Carolinas is going to get hosed in the next five days.
• 5:07
  SPEAKER_00: And then the six to ten day is pretty much a repeat just with smaller amounts.
• 5:13
  SPEAKER_00: So the uh this big massive dry area uh across the mid-south and southeast is pretty much gonna get eliminated in the next 10 days.
• 5:23
  SPEAKER_00: However, this dry area out west in the plains is not going anywhere.
• 5:28
  SPEAKER_00: Matter of fact, it's probably going to get worse.
• 5:30
  SPEAKER_00: They've got a couple of scattered rains coming through, but temperatures Sunday, Monday, Tuesday are really warming up.
• 5:36
  SPEAKER_00: Um, particularly on Monday, you've got highs well into the 90s.
• 5:40
  SPEAKER_00: Uh, this is much earlier than it should be in the 90s out there.
• 5:43
  SPEAKER_00: So not helping those guys whatsoever.
• 5:46
  SPEAKER_00: That's it for today.
• 5:48
  SPEAKER_00: Thanks for listening.
• 5:48
  SPEAKER_00: We'll be back tomorrow.