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Transcript

Daily Market Podcast Jul 23 · 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 Thursday, July 23rd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is up four cents at 488.3 quarters.
• 0:11
  SPEAKER_00: November beans are up eight and a quarter at$12.47 and a quarter.
• 0:16
  SPEAKER_00: And September crude oil is up a whopping$3.90 this morning at$90.70.
• 0:24
  SPEAKER_00: And this is the highest price for crude oil in right at two months.
• 0:30
  SPEAKER_00: For corn news, we discussed how the corn market is primarily focused on the size of the U.S.
• 0:36
  SPEAKER_00: corn crop.
• 0:37
  SPEAKER_00: And this warm, dry weather forecast, which we'll get to in a minute, uh, over the next two weeks will play a big role in what yield the market expects.
• 0:48
  SPEAKER_00: And then on August 12th, USDA will issue its crop production report with its first survey-based estimate for yield.
• 0:57
  SPEAKER_00: And also in that report, USDA can and likely will revise planted area.
• 1:04
  SPEAKER_00: We will not be surprised if USDA increases corn planted area by somewhere in the neighborhood of a million acres.
• 1:12
  SPEAKER_00: So we have lots of crisscrossing data points to be dealing with in the upcoming several weeks regarding the size of the U.S.
• 1:19
  SPEAKER_00: crop.
• 1:20
  SPEAKER_00: But today I want to look at the U.S.
• 1:23
  SPEAKER_00: corn export pace, which is record large.
• 1:27
  SPEAKER_00: U.S.
• 1:27
  SPEAKER_00: outstanding corn export sales are massive.
• 1:30
  SPEAKER_00: And those are sales that we have sold and have not shipped yet.
• 1:36
  SPEAKER_00: And more importantly, global corn demand is record large.
• 1:41
  SPEAKER_00: I've got a chart on the bottom of page one that is well worth taking a look at.
• 1:48
  SPEAKER_00: This is corn exports from the top five global exporters, which is US, Ukraine, Russia, Brazil, Argentina.
• 1:57
  SPEAKER_00: And you can see they are record large month after month after month.
• 2:01
  SPEAKER_00: Matter of fact, if you take the last three months, May, June, and what we expect for July, corn exports from these five exporters is up 18% from last year and 10% above the previous record for this three-month time period.
• 2:19
  SPEAKER_00: So quite obviously, corn export demand is massive.
• 2:24
  SPEAKER_00: But to make this even more impressive, US uh not US, Europe's corn imports for the past three months have not been anything special, and neither have corn imports into China, which we've talked about.
• 2:38
  SPEAKER_00: Both of those we expect uh to increase their corn exports going forward.
• 2:42
  SPEAKER_00: So anything that those two nations do to increase corn imports, then the global export pace just gets even bigger.
• 2:53
  SPEAKER_00: The point is this U.S.
• 2:56
  SPEAKER_00: corn export demand is massive.
• 3:00
  SPEAKER_00: And anything that happens over the next several weeks with a U.S.
• 3:04
  SPEAKER_00: corn crop that lowers production prospects is going to be bullish.
• 3:10
  SPEAKER_00: Maybe even really bullish.
• 3:12
  SPEAKER_00: And we've stated this fact for a couple of months now.
• 3:14
  SPEAKER_00: We have zero margin for error on this U.S.
• 3:17
  SPEAKER_00: crop.
• 3:18
  SPEAKER_00: And right now we're just not treating it very good.
• 3:21
  SPEAKER_00: Moving on to soybeans, not only does the soybean market have to worry about the upcoming U.S.
• 3:26
  SPEAKER_00: weather, but we continue selling more and more U.S.
• 3:29
  SPEAKER_00: soybeans for export.
• 3:31
  SPEAKER_00: And most importantly, demand for both soybean meal and soybean oil is increasing.
• 3:38
  SPEAKER_00: U.S.
• 3:38
  SPEAKER_00: soybean meal export demand seems to be getting bigger.
• 3:41
  SPEAKER_00: We've got crushers slowing down in Brazil, and South American meal export basis is firming.
• 3:49
  SPEAKER_00: It is increasingly looking like we will be getting more meal exports shifting back to the U.S.
• 3:56
  SPEAKER_00: And then we've got crude and energy markets that are firming so much recently, and that is certainly bullish for U.S.
• 4:03
  SPEAKER_00: soybean oil prices.
• 4:05
  SPEAKER_00: So the soybean market is looking at U.S.
• 4:08
  SPEAKER_00: weather that's not good, increasing soybean export demand, and increasing demand for both products.
• 4:15
  SPEAKER_00: Not very hard to see why CBOT soybeans inch higher day after day.
• 4:20
  SPEAKER_00: And at the same time, good demand for both products keeps U.S.
• 4:24
  SPEAKER_00: crush margins really big, and that's never bearish.
• 4:29
  SPEAKER_00: Moving on to weather.
• 4:31
  SPEAKER_00: Again, we've got very limited moisture the next uh 1 to 5, 6 to 10, and even 11 to 15 day time period in the plain states and going across into the heart of the corn belt.
• 4:43
  SPEAKER_00: Um, very limited moisture, and we've got uh the same two maps we've had last couple of days for the high temperatures on Saturday and Sunday, but it's not just Saturday and Sunday in the plains.
• 4:57
  SPEAKER_00: These temperatures um they stay hot well into Wednesday, Thursday of next week.
• 5:03
  SPEAKER_00: But it is interesting that these high temperatures have now shifted over where they're getting more uh into Iowa and Minnesota.
• 5:13
  SPEAKER_00: Also, um I've also got a map, and you can see on page two, I mean, some of these temperatures are well into the 110, 115 degree range, which is obviously hugely detrimental uh to crops and particularly corn crops.
• 5:31
  SPEAKER_00: Um also at the bottom of page two, I've got a uh current soil moisture map, and right where these hot temperatures are hitting, uh, which is basically Kansas up to North Dakota and into western half of Iowa and western half of Minnesota.
• 5:50
  SPEAKER_00: That area is well below normal on soil moisture right now, and that's exactly where these hot temperatures are hitting.
• 5:58
  SPEAKER_00: So this is just quite obviously not good for crops in that area.
• 6:02
  SPEAKER_00: That's it for today.
• 6:03
  SPEAKER_00: We'll be back tomorrow.
• 6:05
  SPEAKER_00: Thanks for listening.