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Daily Market Podcast May 28 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management on Thursday morning, May 28th, with our daily market letter.
• 0:07
  SPEAKER_00: The markets, now that the most of the corn crop and bean crop is planted in the United States, the markets will really begin to focus more on new crop contracts.
• 0:16
  SPEAKER_00: So from here on out, I'll more focus on dees corn and November bean prices.
• 0:22
  SPEAKER_00: So walking in this morning, we've got December corn up four and a half at 482.
• 0:26
  SPEAKER_00: We've got November beans up eight and a quarter at$11.90.
• 0:30
  SPEAKER_00: July crude that has been knee-jerking grain prices around for the last four or five sessions is up$2 at$90.70.
• 0:40
  SPEAKER_00: Going back on crude, uh energy markets got slammed again yesterday.
• 0:45
  SPEAKER_00: Grains follow them lower.
• 0:47
  SPEAKER_00: Iranian TV reported that a memo of understanding had been reached with the United States, stating that within 30 days, Iran would allow vessels to pass through the Strait of Hormuz, and the supposedly the U.S.
• 1:01
  SPEAKER_00: will remove the naval blockade and move forces away from the region.
• 1:06
  SPEAKER_00: But um so far, uh nothing of what has been promised us regarding US and Iran has proven true, so we'll see.
• 1:16
  SPEAKER_00: Um if we look at corn, let's just for the moment, let's assume that crude oil will not be dragging grains lower from here.
• 1:26
  SPEAKER_00: Um if this this you know crude oil is sold off with anticipation of of everything opening back up in the straight.
• 1:35
  SPEAKER_00: Let's just assume, for sake of an argument, crude oil's gone down and bought all it can, and grains will not be dragged lower.
• 1:43
  SPEAKER_00: If that's true, then the market will once again turn its focus to China.
• 1:48
  SPEAKER_00: And China is doing something very interesting.
• 1:51
  SPEAKER_00: China is in buying more corn from Argentina.
• 1:54
  SPEAKER_00: It looks like another 150,000 tons of corn showed up in their export lineup.
• 2:00
  SPEAKER_00: So Argentina corn exports to China for the month of May will end up somewhere around 400,000 tons.
• 2:07
  SPEAKER_00: That's a big deal.
• 2:08
  SPEAKER_00: That is China's first interest in buying corn in many, many months.
• 2:14
  SPEAKER_00: So it becomes pretty easy to argue that if China is back buying corn, why not make corn part of this$17 billion ag deal with the U.S., especially if you're already buying corn.
• 2:27
  SPEAKER_00: The really big key to all this will be if China drops the import tariff on U.S.
• 2:32
  SPEAKER_00: corn and wheat.
• 2:33
  SPEAKER_00: The market will take that as a sign, much like the old days uh with Johnny Carson, here comes Johnny.
• 2:40
  SPEAKER_00: Well, that's gonna be here comes China, and that's gonna be ragingly bullish if and when that happens.
• 2:46
  SPEAKER_00: I am convinced that the market will be very well supported on this break and very likely has limited downside from here.
• 2:54
  SPEAKER_00: We still remain longer-term bullish CBOT corn.
• 2:59
  SPEAKER_00: Moving on to soybeans, there's very little question that China will be the big focus in the soybean market in the mere terms, near term.
• 3:06
  SPEAKER_00: So let's look at some of the details regarding China.
• 3:11
  SPEAKER_00: In October 2025, China agreed to buy 12 million tons of U.S.
• 3:15
  SPEAKER_00: soybeans, and they agreed to make those purchases in the uh late 25, early 26 time period.
• 3:23
  SPEAKER_00: Well, they did exactly what they agreed to, and I've got a chart on the bottom of page one that shows that we began shipping China that 12 million tons of soybeans in November, and that program is almost complete so far.
• 3:39
  SPEAKER_00: With what we have shipped and a little bit that's still in the export lineup, we've had 11.6 million tons of that 12 has already taken place.
• 3:48
  SPEAKER_00: And this 12 million tons of beans was entirely purchased by Sino Grain.
• 3:55
  SPEAKER_00: That is the arm of the Chinese government that controls national grain stocks.
• 4:00
  SPEAKER_00: But in October, China also agreed to purchase 25 million tons of soybeans a year from the US for 26, 27, and 28.
• 4:12
  SPEAKER_00: That has yet to occur.
• 4:14
  SPEAKER_00: Then on top of that, 10 days ago, the White House announced a set this$17 billion ag deal with China.
• 4:20
  SPEAKER_00: That$17 billion is in addition to the$5 million tons um agreed to earlier.
• 4:30
  SPEAKER_00: If um so so let's just look if China does what they've already agreed to, let's not even go into the$17 billion yet.
• 4:40
  SPEAKER_00: Let's just say they do buy this$25 million tons a year um export program to China, that would be very bullish for CBOT soybeans, especially with our crush rate running so high.
• 4:57
  SPEAKER_00: The question we all have today is this for China to take this extra 25 million tons, the Chinese government would need to remove import tariffs on U.S.
• 5:06
  SPEAKER_00: soybeans so that this next go around private crushers could participate and do some import business, not just cinograin.
• 5:16
  SPEAKER_00: Today, that import tariff is around$1.20 a bushel versus Brazilian soybeans that have no import tariff.
• 5:25
  SPEAKER_00: So as of today, if the import tariff is on there and you told Chinese crushers you're allowed to buy beans wherever you want to, they would not be buying U.S.
• 5:35
  SPEAKER_00: beans.
• 5:36
  SPEAKER_00: The timing, also, the timing of this 25 million tons is critical.
• 5:41
  SPEAKER_00: When do we ship it?
• 5:42
  SPEAKER_00: We all know China has pulled all kind of shenanigans.
• 5:46
  SPEAKER_00: Do they buy the 25 uh million tons in 2026 and then wait and ship it in 27 or 28?
• 5:56
  SPEAKER_00: We don't know.
• 5:56
  SPEAKER_00: We have no idea.
• 5:59
  SPEAKER_00: We still believe that CBOT soybeans have sold off about all they can right now, and their recent lows around 1180 in July will be very strong support.
• 6:09
  SPEAKER_00: And the more details that we get on China, then the market has got some some pretty decent upside to it, especially in the near term.
• 6:18
  SPEAKER_00: Um, now let's move on to weather.
• 6:20
  SPEAKER_00: In the next five days, the South, um Arkansas across to Georgia stays uh dripping wet uh again, with most areas receiving inch and a half, uh, some areas up to two inches.
• 6:33
  SPEAKER_00: And then you look beyond into early middle part of next week, and you've got very light rains um scattered across the country.
• 6:43
  SPEAKER_00: Uh, really nothing noteworthy there.
• 6:45
  SPEAKER_00: I do want to call attention to two items internationally.
• 6:49
  SPEAKER_00: One is they're engaged in a heat wave in Europe right now, particularly um the UK, France, and Spain with temperatures the last two, three days and for the next three to four days, uh, well up into the 90s with some 95 degree temperatures.
• 7:10
  SPEAKER_00: Um, there's widespread widespread uh discussion out there that this is hurting their wheat crops, their barley crops, and even the recently planted corn crops.
• 7:21
  SPEAKER_00: In Brazil, uh, you are also staying bone dry in the second crop corn area uh in Mato Grosso and Goyas.
• 7:29
  SPEAKER_00: We've talked about this before, particularly related to the corn market.
• 7:32
  SPEAKER_00: We cannot afford uh grain crop issues anywhere in the world.
• 7:38
  SPEAKER_00: And here's two of them one is Europe and the other is Brazil.
• 7:41
  SPEAKER_00: So, again, this is longer term bullish for soybean, I mean, for corn.
• 7:46
  SPEAKER_00: That's all we have for today.
• 7:48
  SPEAKER_00: Thanks so much for listening.
• 7:49
  SPEAKER_00: We'll be back tomorrow.