Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Jun 26

Transcript

Daily Market Podcast Jun 26 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Friday, June 26th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down one quarter at 442 and three quarters.
• 0:10
  SPEAKER_00: November beans are down five and three quarters at 11.51 and a quarter.
• 0:14
  SPEAKER_00: And August crude is down 220 at 6970.
• 0:19
  SPEAKER_00: Walking in this morning.
• 0:21
  SPEAKER_00: So the news this morning is all about China, or the news yesterday, rather.
• 0:25
  SPEAKER_00: China finally shows up.
• 0:26
  SPEAKER_00: On the export sales report yesterday morning, China showed up uh buying 200,000 tons of U.S.
• 0:32
  SPEAKER_00: beans.
• 0:33
  SPEAKER_00: And then later in the morning, China was back in bidding for U.S.
• 0:37
  SPEAKER_00: soybeans for October shipment out of the Gulf and out of the PNW.
• 0:43
  SPEAKER_00: I believe this is part of the 25 million ton agreement that was signed back in October of 2025.
• 0:50
  SPEAKER_00: So what about the$17 billion worth of U.S.
• 0:55
  SPEAKER_00: goods that are supposed to be going to China also?
• 0:57
  SPEAKER_00: We have yet to see them in buying U.S.
• 1:00
  SPEAKER_00: corn or wheat, but they actually have come in and they're sniffing around buying a little bit of sorghum.
• 1:06
  SPEAKER_00: So, as for corn news, there are so many rumors flying around about China.
• 1:12
  SPEAKER_00: Um, yesterday and last night, we're not aware that China is in bidding for any corn like they are for soybeans, but there is talk that China may soon remove the 15% import duty on U.S.
• 1:24
  SPEAKER_00: corn and wheat.
• 1:26
  SPEAKER_00: Personally, I will not be shocked if this never happens.
• 1:30
  SPEAKER_00: Right now, cyanograin is buying the U.S.
• 1:33
  SPEAKER_00: grains going to China.
• 1:35
  SPEAKER_00: Sino grain is the arm of the Chinese government that is in charge of national grain stocks.
• 1:41
  SPEAKER_00: So if cino grain brings in U.S.
• 1:43
  SPEAKER_00: corn or U.S.
• 1:44
  SPEAKER_00: wheat, there is no tariff.
• 1:46
  SPEAKER_00: Why would the Chinese government charge itself a tariff?
• 1:49
  SPEAKER_00: It doesn't work.
• 1:51
  SPEAKER_00: Um, but as far as other U.S.
• 1:54
  SPEAKER_00: business, um, weekly U.S.
• 1:56
  SPEAKER_00: corn sales continue to be super strong.
• 1:59
  SPEAKER_00: And it's not just big corn business going to Mexico.
• 2:02
  SPEAKER_00: Corn sales are big to the EU, to Japan, Taiwan, South Korea, North Africa, Central America, you name it.
• 2:11
  SPEAKER_00: We're doing a crazy amount of U.S.
• 2:13
  SPEAKER_00: corn export business right now.
• 2:15
  SPEAKER_00: Meanwhile, corn harvest in Argentina is now 51% complete.
• 2:19
  SPEAKER_00: Yields thus far continue to be really good.
• 2:22
  SPEAKER_00: If you look at the five nations that have been the largest corn exporters for years, that would be US, Argentina, Brazil, Russia, Ukraine.
• 2:31
  SPEAKER_00: Three of those five, Brazil, Russia, and Ukraine, do not have the corn supplies to have big corn exports.
• 2:38
  SPEAKER_00: This keeps U.S.
• 2:40
  SPEAKER_00: corn export business big for a long, long time.
• 2:44
  SPEAKER_00: I still remain longer-term bullish CBOT corn.
• 2:48
  SPEAKER_00: But we still don't know when this Chinese business is going to show up.
• 2:52
  SPEAKER_00: And today, the corn belt weather is still okay.
• 2:56
  SPEAKER_00: I'll talk about weather here uh in a minute because there are maybe some concerns coming up next week.
• 3:03
  SPEAKER_00: Moving on to soybeans, China, like we said earlier, China was in bidding for U.S.
• 3:07
  SPEAKER_00: soybeans yesterday.
• 3:08
  SPEAKER_00: There's some talk that China may have bought 10 to 12 cargoes of U.S.
• 3:12
  SPEAKER_00: beans.
• 3:12
  SPEAKER_00: That would be somewhere in the neighborhood of 500,000, maybe 550,000 tons.
• 3:17
  SPEAKER_00: One major detail that we have never gotten clarified is the timing of the purchases in this agreement.
• 3:25
  SPEAKER_00: If we read through the agreement, the words used, we assume that China has until the end of the 26-27 crop year to ship 25 million tons of U.S.
• 3:38
  SPEAKER_00: beans.
• 3:39
  SPEAKER_00: That would be August 31 of next year.
• 3:42
  SPEAKER_00: They have until then to ship the 25 million tons.
• 3:46
  SPEAKER_00: If we logically assume that Brazil will increase soybean plantings again this fall, the world will have plenty of cheap South American beans next spring.
• 4:01
  SPEAKER_00: Then it would make much more sense that China would want the U.S.
• 4:05
  SPEAKER_00: soybeans between now and January.
• 4:08
  SPEAKER_00: Okay, when January is when Brazil starts shipping their new crop beans.
• 4:12
  SPEAKER_00: And by the way, as of this morning, U.S.
• 4:16
  SPEAKER_00: Gulf soybeans are cheaper than beans coming from South America, from Brazil, from August until early January.
• 4:25
  SPEAKER_00: So why not buy the U.S.
• 4:26
  SPEAKER_00: beans?
• 4:28
  SPEAKER_00: So now this is all applying logic to actions of the Chinese government, and let's just be honest, that may be a stretch.
• 4:36
  SPEAKER_00: But logically, we could see China in buying most of that 25 million tons of beans here pretty quickly and shipping them here pretty quickly.
• 4:47
  SPEAKER_00: But then we've got these random days like today when crude oil is down$2 and it's dragging bean oil and dragging beans lower with it.
• 4:55
  SPEAKER_00: So net net, you know, we stated yesterday, longer term, the world has plenty of soybeans.
• 5:01
  SPEAKER_00: If China buys U.S.
• 5:02
  SPEAKER_00: beans from us, they're not buying them from somebody else.
• 5:05
  SPEAKER_00: This is like shifting deck chairs on an ocean liner.
• 5:09
  SPEAKER_00: So if CBOT soybeans rally off of this Chinese business, I'm still in the camp that that's a rally to sell.
• 5:16
  SPEAKER_00: Let's be honest, that rally could last a while, but it's still a rally to sell.
• 5:20
  SPEAKER_00: All right, we need to make a side note this morning on U.S.
• 5:25
  SPEAKER_00: weather going forward.
• 5:27
  SPEAKER_00: The weather models, and there's there's multiple weather models, EU, US, Canadian, the Air Force had its own weather model, you name it.
• 5:38
  SPEAKER_00: Most of these weather models are putting a high pressure system in the plain states over the weekend, and it sits there for at least a week.
• 5:45
  SPEAKER_00: And I've got some apps on this on the third page.
• 5:48
  SPEAKER_00: And high pressure obviously means dry weather, right?
• 5:52
  SPEAKER_00: Well, the area from Oklahoma Panhandle to South Central South Dakota has a large high pressure, high pressure system that's just camped out there for a week.
• 6:02
  SPEAKER_00: And they have multiple days of high temperatures.
• 6:06
  SPEAKER_00: Um now I mentioned the week because the weather models kind of get a little screwy once you get past next weekend.
• 6:13
  SPEAKER_00: Um it's it's way down the curve as far as their forecasting ability, and they just don't really know how to handle it.
• 6:21
  SPEAKER_00: So if we walk in next week and these weather models still have this high pressure in there sitting there, and the weather models start to shift it to the east toward St.
• 6:31
  SPEAKER_00: Louis, therefore, implying you're going to start drying out the corn belt, then U.S.
• 6:36
  SPEAKER_00: grain markets will very quickly be concerned about summer crops.
• 6:41
  SPEAKER_00: So this is something we really, really need to pay attention to early next week.
• 6:45
  SPEAKER_00: Moved on to cattle weather, uh, or cat not cattle weather, cattle comments.
• 6:50
  SPEAKER_00: Uh, we now, as of this morning, have 25 cases of this New World Screwworm in the United States.
• 6:55
  SPEAKER_00: I've got a map of where their cases are located.
• 6:58
  SPEAKER_00: It's uh several cases in southeastern New Mexico.
• 7:03
  SPEAKER_00: The rest of them are scattered about in south central, central and south central Texas.
• 7:08
  SPEAKER_00: Um, but it's several things interesting about this.
• 7:12
  SPEAKER_00: Number one, the cases are not just right next to the Mexican border.
• 7:18
  SPEAKER_00: Okay, so they're they're well owned up into Texas, which means we could probably find more.
• 7:24
  SPEAKER_00: So far, all the cases have been in domestic animals where they're looking for them.
• 7:28
  SPEAKER_00: We have not found any in wildlife, and you know they gotta be there.
• 7:31
  SPEAKER_00: Okay.
• 7:32
  SPEAKER_00: And number three, they have not detected any of the cases, any of the particular flies that they're looking for in their fly traps.
• 7:42
  SPEAKER_00: So to me, all of these points uh really screams that APIS is going to find more and more and more cases, especially with them looking super hard for.
• 7:54
  SPEAKER_00: Okay, so this thing ain't over with yet.
• 7:57
  SPEAKER_00: Also, uh in as far as cattle news today, I really want to focus on retail prices.
• 8:04
  SPEAKER_00: Um, they came out a week ago, and we have a couple of charts uh on the bottom of page two.
• 8:12
  SPEAKER_00: Beef prices, retail beef prices are up 13% from year ago.
• 8:16
  SPEAKER_00: Pork and chicken are basically unchanged from year ago prices.
• 8:20
  SPEAKER_00: Uh, pork's up 1%, chicken's down 1%.
• 8:23
  SPEAKER_00: And lately there's been a lot of research out and many articles written about U.S.
• 8:27
  SPEAKER_00: consumer spending, particularly with the U.S.
• 8:29
  SPEAKER_00: invading Iran and fuel prices going through the roof.
• 8:32
  SPEAKER_00: Economists expected U.S.
• 8:35
  SPEAKER_00: consumer spending on beef to really slow down.
• 8:38
  SPEAKER_00: But even with the high fuel prices during the March, April, May time period, we have not seen the U.S.
• 8:46
  SPEAKER_00: consumer cut back on spending on beef.
• 8:49
  SPEAKER_00: Even with beef prices record high versus pork and chicken, the U.S.
• 8:54
  SPEAKER_00: consumer has not cut back.
• 8:57
  SPEAKER_00: Now, some of this may seem logical.
• 9:01
  SPEAKER_00: Um sorry, some of this may not seem logical, but we do have to wonder if some of this crazy strong beef demand is related to all of the GLP 1 prescriptions in the US.
• 9:13
  SPEAKER_00: The latest data claims that there are currently some 30 to 35 million prescriptions of GLP 1 drugs in the United States.
• 9:22
  SPEAKER_00: That's roughly 12%, plus or minus, of the U.S.
• 9:26
  SPEAKER_00: population.
• 9:27
  SPEAKER_00: And that is nearly double what the number of prescriptions were uh at the end of the first quarter a year ago.
• 9:37
  SPEAKER_00: So you gotta believe that this has boosted beef demand uh some degree in the United States.
• 9:46
  SPEAKER_00: At the same time, um there are multiple flour mills that are reported reporting sluggish demand for wheat flour for the first time in decades.
• 9:59
  SPEAKER_00: That demand is usually pretty steady, irregardless of the economy.
• 10:03
  SPEAKER_00: So net net beef demand remains super strong, irregardless of what else is going on, particularly high fuel prices.
• 10:13
  SPEAKER_00: But even with strong beef demand, we still have plenty of cattle and feed and very heavy weights.
• 10:20
  SPEAKER_00: And I'm still in the camp that the rest of 2026 it becomes hard to build a bull story, especially up at these current high price levels.
• 10:29
  SPEAKER_00: Speculators are big time long live cattle futures, and we still believe that there is more downside for August, Ock, and December live cattle futures than upside today.
• 10:40
  SPEAKER_00: However, feeders remain a very different story.
• 10:43
  SPEAKER_00: U.S.
• 10:44
  SPEAKER_00: feeder cattle supply should remain very tight for at least the next two years, and that keeps a bid under calf and feeder prices going forward.
• 10:53
  SPEAKER_00: Moving on to weather, the next several days we've got a system coming across uh Missouri, uh Southern Illinois, Kentucky, Tennessee area.
• 11:03
  SPEAKER_00: And then next week, um precip is maybe a little bit below normal, uh, you know, half general scattered half inch across the cornbutt next week.
• 11:13
  SPEAKER_00: But the real focus, I've got a chart on here of where these weather models have the high pressure next Saturday, July 4th.
• 11:23
  SPEAKER_00: And please take a look at that.
• 11:25
  SPEAKER_00: It's basically centered over western Kansas.
• 11:28
  SPEAKER_00: Um, that's what we really, really need to be watching when we walk in next week.
• 11:33
  SPEAKER_00: What do the weather models do with this high pressure system?
• 11:37
  SPEAKER_00: Right now, the various models really don't know what to do with it.
• 11:40
  SPEAKER_00: Uh, some shift it back west, some east.
• 11:44
  SPEAKER_00: It's it's just way too far out the curve to have much reliability.
• 11:47
  SPEAKER_00: So early next week, that's going to be a critical focus point uh for these markets of what does this high pressure system do?
• 11:56
  SPEAKER_00: If the models start to take it east in the corn belt, therefore drying out the corn belt, then the weather scenario grossly changes for the from what we've had for the corn belt, and the market becomes super worried about weather going forward.
• 12:10
  SPEAKER_00: So, anyway, that's it uh for today, and actually that's it for the week.
• 12:14
  SPEAKER_00: Y'all have a great weekend.
• 12:15
  SPEAKER_00: We'll be back on Monday morning.
• 12:16
  SPEAKER_00: Thanks for listening.