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Transcript

Daily Market Podcast Jul 27 · 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 morning, July 27th.
• 0:07
  SPEAKER_00: We got a lot to talk about this morning, a lot of moving parts.
• 0:10
  SPEAKER_00: December corn walking in this morning is down 13 and 3 quarters at 473 and 3 quarters.
• 0:16
  SPEAKER_00: November beans are down 35 at 1218 and a half.
• 0:20
  SPEAKER_00: December meal is down 880 at 326.40.
• 0:25
  SPEAKER_00: And September crude oil is getting whacked this morning.
• 0:29
  SPEAKER_00: It's down 530 at 84 even.
• 0:32
  SPEAKER_00: Before we get to corn of beans, a couple of things we really need to talk about mainly in cattle here.
• 0:40
  SPEAKER_00: Friday afternoon, Secretary of AG Rollins announced that there will be a phased reopening of the U.S.
• 0:48
  SPEAKER_00: Mexico border to cattle trade.
• 0:52
  SPEAKER_00: Douglas, Arizona will be the first border crossing to reopen, and then at some later date, two more ports of entry into Mexico will reopen.
• 1:00
  SPEAKER_00: Every animal entering the United States will undergo a full USD inspection to ensure that it is free of any signs of New World Screwworm.
• 1:10
  SPEAKER_00: We expect early number crossing numbers to be very, very slow, but that really doesn't have anything to do with the cattle market because uh the cattle market will assume the worst, and we can have a whole lot of volatility in both CME live cattle and feeder futures today and tomorrow.
• 1:30
  SPEAKER_00: So I have a link to that announcement uh on the top of page one if you have any further questions there.
• 1:36
  SPEAKER_00: Moving on to corn news.
• 1:38
  SPEAKER_00: We have two items that are driving CBOT corn lower this morning.
• 1:42
  SPEAKER_00: Number one is crude oil is much lower, and that obviously has a direct impact on corn via ethanol and soybean oil via uh renewable diesel.
• 1:52
  SPEAKER_00: And number two, weather models this morning have shifted the high pressure system back south and west away from the corn belt, and that does remove some of the dryness for next week and beyond.
• 2:04
  SPEAKER_00: So some of these speculators that plowed in buying CBOT corn last week are getting out this morning.
• 2:10
  SPEAKER_00: Shifting to Europe, um, on the bottom of page one, we have a chart of French corn crop condition ratings, and they continue to crater.
• 2:19
  SPEAKER_00: That corn crop in Europe is just going to hell in a handbasket.
• 2:23
  SPEAKER_00: As for U.S.
• 2:24
  SPEAKER_00: crop ratings, we expect condition ratings this afternoon to drop.
• 2:28
  SPEAKER_00: Uh, but the quick question, big question is how much?
• 2:32
  SPEAKER_00: Uh does it drop two points, three points, four points.
• 2:35
  SPEAKER_00: Weather this week continues to look hot and dry, particularly for the plains uh and western corn belt.
• 2:42
  SPEAKER_00: So we have lots of moving parts this morning for CBOT corn.
• 2:45
  SPEAKER_00: We are still firmly in the camp that CBOT corn has much more upside than downside longer term.
• 2:52
  SPEAKER_00: But right here, right now, we simply have too many items that are knee-jerking, uh knee-jerking us around.
• 2:57
  SPEAKER_00: As for soybeans, uh CBOT soybeans, meal and oil all posted new highs either Thursday or Friday, and they are all much lower this morning.
• 3:07
  SPEAKER_00: This is partly related to crude oil being down$5 and partly less inflammatory weather forecast for next week and beyond.
• 3:15
  SPEAKER_00: As for meal, uh, which I continue to be nervous about, Argentina uh exports of meal remain fairly large, but it does seem the meal exports from Brazil are slowing down.
• 3:27
  SPEAKER_00: Crush margins in interior Brazil are a negative$5 to negative$15 a ton this morning.
• 3:35
  SPEAKER_00: So this slows down the crush rates and therefore slows down meal exports.
• 3:39
  SPEAKER_00: I'm still nervous that the U.S.
• 3:41
  SPEAKER_00: gets more meal export business, so that keeps U.S.
• 3:45
  SPEAKER_00: meal prices firm.
• 3:47
  SPEAKER_00: U.S.
• 3:48
  SPEAKER_00: crush margins remain super, super strong.
• 3:51
  SPEAKER_00: So it's hard to be bearish soybeans quite yet.
• 3:55
  SPEAKER_00: I am still bearish soybeans longer term, just not right now.
• 4:00
  SPEAKER_00: Um and obviously on the bottom of page one, we have a chart of the French corn crop ratings.
• 4:06
  SPEAKER_00: And it's not just France, it is a much larger area of Europe that is having a disastrous corn growing season.
• 4:15
  SPEAKER_00: So a big down in U.S.
• 4:18
  SPEAKER_00: corn production, uh and I'm sorry, in EU corn production means much, much larger corn import demand down the road.
• 4:25
  SPEAKER_00: Moving on to weather, um, we continue to have very limited um rains in the plain states this week and next.
• 4:35
  SPEAKER_00: It does seem that next week uh we are able to open up the Gulf some and get some more rain into the mid-south and some of the central and eastern parts of the Corn Belt.
• 4:48
  SPEAKER_00: The high temperatures uh stay pretty much isolated to the plains.
• 4:54
  SPEAKER_00: The on and I'm talking these really hot 110 plus temperatures.
• 4:58
  SPEAKER_00: However, I do have on the bottom of page two, I have this 6 to 10 and 8 to 14 day outlook, and both of them have us returning to normalish type precip for next weekend beyond.
• 5:13
  SPEAKER_00: Um temperatures are still a little bit normal, but uh a little bit above normal, but precip is uh is back to normalish.
• 5:22
  SPEAKER_00: So the big question that we have this morning is how much damage have we already done to the US corn crop?
• 5:28
  SPEAKER_00: And the market is gonna really, really focus on US uh crop condition ratings on corn this afternoon.
• 5:34
  SPEAKER_00: That's it for today.
• 5:36
  SPEAKER_00: Thanks for listening.
• 5:36
  SPEAKER_00: We'll be back tomorrow.