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Transcript

Daily Market Podcast Aug 24 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Measurement with our daily market letter on Monday, August 24th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is up 12 and three quarters at 521 and a quarter.
• 0:12
  SPEAKER_00: November soybeans are down six and a quarter at twelve thirty-three and a half.
• 0:17
  SPEAKER_00: Uh December meal is up one and a half at 327.10.
• 0:23
  SPEAKER_00: And October crude is down$1.80 at$85.30.
• 0:28
  SPEAKER_00: So let's cover some global news first that could impact our grain markets, and then we'll cover corn and beans.
• 0:36
  SPEAKER_00: Over the weekend, President Trump declared that the U.S.
• 0:39
  SPEAKER_00: is preparing for an economic D-day with Iran.
• 0:44
  SPEAKER_00: Trump stated that no nation, bank, or company will be able to issue any lifeline to Iran.
• 0:51
  SPEAKER_00: He will supposedly provide more information on that concept today.
• 0:55
  SPEAKER_00: Also, Treasury Secretary Bessant stated yesterday that every nation in the world will have to pick a side, U.S.
• 1:03
  SPEAKER_00: or Iran.
• 1:05
  SPEAKER_00: From a grain market perspective, that will impact, definitely impact China, because China has been providing help to Iran.
• 1:13
  SPEAKER_00: China also has been buying lots of U.S.
• 1:16
  SPEAKER_00: soybeans.
• 1:18
  SPEAKER_00: So, and we fully expect them to buy another$17 billion worth of U.S.
• 1:22
  SPEAKER_00: goods at some point this year.
• 1:24
  SPEAKER_00: So now that creates a lot of questions regarding Chinese demand for U.S.
• 1:28
  SPEAKER_00: ag goods.
• 1:31
  SPEAKER_00: So let's move on to corn now.
• 1:34
  SPEAKER_00: CBOT corn raced higher to new contract highs last night.
• 1:39
  SPEAKER_00: This move is all about the ProFarmer Crop Tour that we talked about endlessly last week.
• 1:46
  SPEAKER_00: Late Friday afternoon, ProFarmer issued a U.S.
• 1:49
  SPEAKER_00: corn yield of 173.2 bushels per acre.
• 1:53
  SPEAKER_00: History shows us that their U.S.
• 1:55
  SPEAKER_00: corn yield is typically one to three bushels lower than what USDA will end up with.
• 2:01
  SPEAKER_00: I still contend that their state level data is far more valuable than their U.S.
• 2:06
  SPEAKER_00: estimate.
• 2:07
  SPEAKER_00: And let's dive into that just for a minute to look at some of the details.
• 2:12
  SPEAKER_00: This year, their seven state average length of grain on an average year of corn that they counted in the field was 6.75 inches.
• 2:23
  SPEAKER_00: That is down 5% from a year count.
• 2:27
  SPEAKER_00: Their seven state year count per acre is 28,690.
• 2:33
  SPEAKER_00: That is down 2% from last year.
• 2:37
  SPEAKER_00: So their state level data strongly points to a U.S.
• 2:42
  SPEAKER_00: corn yield uh in the neighborhood of 175, 176.
• 2:46
  SPEAKER_00: Down, that would be down 6% from a year ago.
• 2:50
  SPEAKER_00: And that would be well below USDA's current estimate of 180.7.
• 2:55
  SPEAKER_00: So a lot of numbers there, but point is pro farmers data is bullish.
• 3:01
  SPEAKER_00: And as we and we discussed that late last week.
• 3:06
  SPEAKER_00: And for those of you, I don't know if everybody got to see the lengthy report that I issued on Friday afternoon.
• 3:12
  SPEAKER_00: If not, please go back and take a look.
• 3:14
  SPEAKER_00: This kind of lays out what this potentially this type of yield would mean for U.S.
• 3:21
  SPEAKER_00: grain prices in the near term and particularly longer term.
• 3:25
  SPEAKER_00: Meanwhile, corn yield in Europe continue to get smaller, and as far as export prices go, U.S.
• 3:30
  SPEAKER_00: golf remains 20 cents a bushel cheaper than Brazilian corn prices this morning.
• 3:34
  SPEAKER_00: So U.S.
• 3:35
  SPEAKER_00: corn exports remain big.
• 3:38
  SPEAKER_00: Clearly, I remain bullish corn, both in the near term and longer term.
• 3:42
  SPEAKER_00: Moving on to soybeans, the U.S.
• 3:45
  SPEAKER_00: uh, the sorry, the pro farmer tour estimated the U.S.
• 3:48
  SPEAKER_00: soybean yield at 53.2 bushels per acre.
• 3:52
  SPEAKER_00: The history on them estimating a U.S.
• 3:55
  SPEAKER_00: soybean yield is so-so at best.
• 3:58
  SPEAKER_00: Statistically, their number really does not apply that USDA will make any change to their latest soybean yield.
• 4:05
  SPEAKER_00: Um, but again, they just really don't do a great job on beans.
• 4:09
  SPEAKER_00: Late last week, USDA announced some 1.4 million tons of beans sold to China.
• 4:18
  SPEAKER_00: Of U.S.
• 4:18
  SPEAKER_00: beans.
• 4:19
  SPEAKER_00: So this morning, this with a pro-farmer yield basically not implying a drop in the U.S.
• 4:27
  SPEAKER_00: crop, and then Trump statements about any nation helping Iran, the market is now questioning Chinese demand.
• 4:35
  SPEAKER_00: So as a result, CBOT soybeans are down five to six cents this morning.
• 4:40
  SPEAKER_00: On a side note, Brazilian uh farmers in Brazil and Argentina are both planning on planting more soybeans this fall.
• 4:52
  SPEAKER_00: So if, and this is a big if, if the U.S.
• 4:56
  SPEAKER_00: crop ends up okay, and South America plants more beans, and their bean crops are okay, then by the time we get to next spring, the world once again has too many soybeans.
• 5:08
  SPEAKER_00: But we have a long, long ways to go to get there.
• 5:11
  SPEAKER_00: Right now, U.S.
• 5:13
  SPEAKER_00: Gulf soybean prices are still 50 cents a bushel, cheaper than Brazil, and export demand is good.
• 5:18
  SPEAKER_00: And we still have a lot of U.S.
• 5:20
  SPEAKER_00: growing season left to go ahead of us.
• 5:22
  SPEAKER_00: So, you know, let's also not forget that U.S.
• 5:25
  SPEAKER_00: crush margins are still huge.
• 5:27
  SPEAKER_00: So for now, CBOT soybeans may have done about all they can do to the upside, but I still think any break, any breaks will be very well supported.
• 5:38
  SPEAKER_00: On a side note, we are trying to and we're trying to better understand what this means, but there's a new development of soybean oil.
• 5:47
  SPEAKER_00: Evidently, hydrogen is part of the renewable diesel process, and there are now several locations reporting a shortage of hydrogen.
• 5:59
  SPEAKER_00: So, does that mean they've slowed down production?
• 6:02
  SPEAKER_00: We don't really know.
• 6:02
  SPEAKER_00: We're we're digging into this as we learn more about this, we'll we'll report.
• 6:07
  SPEAKER_00: So, moving on to weather.
• 6:09
  SPEAKER_00: Um, you basically, the corn belt has got light to scattered, you know, kind of below normal precip this week, and they move back into next week normal ishtake rainfall pretty much across the entire corn belt.
• 6:24
  SPEAKER_00: Um, the west remains below normal, uh, and west meaning Texas to South Dakota.
• 6:32
  SPEAKER_00: Um, and another thing that we need to start putting on our radar is Brazilian weather.
• 6:38
  SPEAKER_00: Um, Brazil will start planting soybeans in September, and they need seasonal rains to show up before they ever start planting.
• 6:46
  SPEAKER_00: Well, the next five days is bone dry in Brazil, and they have got temperatures that are already uh well above 100 degrees in Mato Grosso.
• 6:58
  SPEAKER_00: Uh so uh that scenario needs to change dramatically by the time we get uh you know several weeks down the road, or we're just not gonna start planning on time.
• 7:08
  SPEAKER_00: So, anyway, we've got time on our side, but we need to be watching that.
• 7:11
  SPEAKER_00: That's it for today.
• 7:12
  SPEAKER_00: Thanks for listening.
• 7:13
  SPEAKER_00: We'll be back tomorrow.