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Daily Market Podcast Sep 8 · 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 Tuesday morning, September 8th.
• 0:07
  SPEAKER_00: Walking in this morning, we have December corn.
• 0:09
  SPEAKER_00: It is up three quarters of a cent at 5.37 and a half.
• 0:13
  SPEAKER_00: We have November soybeans down four and three quarters at 13.05.
• 0:17
  SPEAKER_00: December meal is down 560 at 349.50.
• 0:21
  SPEAKER_00: And October crude is up$2 at$93.50 walking in this morning.
• 0:27
  SPEAKER_00: We need to start today's conversation with Russia and Ukraine over the weekend.
• 0:32
  SPEAKER_00: U.S.
• 0:33
  SPEAKER_00: sent envoys that held meetings in both Moscow and Kyiv trying to negotiate some peace agreement between the two nations, but no agreement was reached, and bombings and drone attacks resumed immediately after the negotiators left.
• 0:49
  SPEAKER_00: So that is supportive to global grain markets this morning, particularly wheat.
• 0:55
  SPEAKER_00: Wheat is up 11 cents right now.
• 0:57
  SPEAKER_00: It was up almost 30 cents at one point last night.
• 1:02
  SPEAKER_00: So as far as core news, on Friday, SP Global, and that's the old Informa or the old Sparks companies, they issued their farmer survey-based U.S.
• 1:14
  SPEAKER_00: corn yield at 180 bushels per acre.
• 1:17
  SPEAKER_00: This follows other estimates last week from Allendale, 178.7, and the Land Group at 178.
• 1:25
  SPEAKER_00: Combined, these numbers would suggest USDA on Friday comes in somewhere around 179-ish.
• 1:33
  SPEAKER_00: Okay.
• 1:34
  SPEAKER_00: This would be down from their August USDA's August yield of 180.7.
• 1:40
  SPEAKER_00: However, the market, as we've talked about, the market has been looking for a yield somewhere between 175 and 176, given the declining U.S.
• 1:50
  SPEAKER_00: crop condition ratings and also the very low yield from ProFarmer Tour in mid-August.
• 1:57
  SPEAKER_00: So the yields from SP Global and Allendale and Lynn, none of these yields suggest that USDA will place the yield, their yield, low enough to be supportive to this market.
• 2:13
  SPEAKER_00: Also, last week, and related to this, speculators continue to just plow into longs and CBOT grains.
• 2:22
  SPEAKER_00: As of this morning, speculators have the largest long position ever reported in corn and the largest long position ever reported in corn, wheat, and soybeans combined.
• 2:38
  SPEAKER_00: It becomes pretty easy to argue that this market needs bullish news from USDA on Friday.
• 2:44
  SPEAKER_00: I'm still in the camp that speculator buying has run this market plenty high enough for now, especially with harvest picking up the next few weeks.
• 2:54
  SPEAKER_00: This week we could easily see CBOT corn bounce around and go nowhere.
• 2:59
  SPEAKER_00: The market will be waiting on USDA's crop production report on Friday morning at 11 a.m.
• 3:04
  SPEAKER_00: I do remain longer-term bullish CBOT corn, but that's several months down the road.
• 3:11
  SPEAKER_00: Not today.
• 3:13
  SPEAKER_00: As far as soybean news goes, the soybean market keeps bouncing around erratically with multiple forces knee-jerking it back and forth last week.
• 3:24
  SPEAKER_00: We have upcoming, we have the USDA report on Friday and the same firms I mentioned earlier.
• 3:32
  SPEAKER_00: They all place the U.S.
• 3:34
  SPEAKER_00: crop somewhere between unchanged from what USDA reported in August to maybe down just a freckle.
• 3:42
  SPEAKER_00: None of those numbers are bullish.
• 3:45
  SPEAKER_00: But then we have China that's picking up their U.S.
• 3:48
  SPEAKER_00: swimming purchases ahead of the Trump and Z meeting in two weeks.
• 3:54
  SPEAKER_00: And we have the trade U.S.
• 3:55
  SPEAKER_00: Trade Representative's office continuing to hint at some ag agreements that will be announced during the Chinese visit.
• 4:04
  SPEAKER_00: Also, so that's supportive, right?
• 4:08
  SPEAKER_00: But then we have Chinese soybean imports last several months have been huge and the crush rates have been very large.
• 4:15
  SPEAKER_00: But today crush margins in China are negative.
• 4:18
  SPEAKER_00: So import demand may start to back off.
• 4:22
  SPEAKER_00: So you don't really know what to think of China.
• 4:25
  SPEAKER_00: And then we have to worry about finishing weather for this U.S.
• 4:29
  SPEAKER_00: bean crop.
• 4:30
  SPEAKER_00: We've still got some heat, but rain seemed like they have come back in the forecast.
• 4:36
  SPEAKER_00: This all leaves CBOT soybean market lacking an overall direction.
• 4:41
  SPEAKER_00: Like corn, I think we have pushed CBOT soybeans high enough for now.
• 4:46
  SPEAKER_00: We need to get further down the road and see how this U.S.
• 4:49
  SPEAKER_00: crop ends up and see what goes on with China.
• 4:52
  SPEAKER_00: I would expect soybeans to trade mostly sideways this week until we get this U.S.
• 4:57
  SPEAKER_00: report, USDA report either way on Friday.
• 5:02
  SPEAKER_00: I've got a chart at the bottom of page one with the last 10 years of history of U.S.
• 5:08
  SPEAKER_00: cornules, and then I show multiple forecasts of where people think uh it's going to come out for September.
• 5:16
  SPEAKER_00: As far as weather, um, we've got better rains in the forecast this week uh and next week, particularly for the center of the corn belt.
• 5:26
  SPEAKER_00: Uh, but we do still have some of these just smoking hot temperatures, uh, Oklahoma up to Nebraska and over into uh Missouri and Arkansas.
• 5:38
  SPEAKER_00: Also, we need to mention Argentina.
• 5:41
  SPEAKER_00: Uh, I've had conversations with friends in Argentina that uh even though they are on the early parts just starting corn planting, some guys have already stopped, or other guys are waiting on rains to pick up uh because soils are just too dry.
• 5:57
  SPEAKER_00: And this heart, the central Santa Fe down into Buenos Aires, they need more rain uh before farmers can really pick up planting in corn.
• 6:07
  SPEAKER_00: So we need to watch that.
• 6:09
  SPEAKER_00: That's it for today.
• 6:10
  SPEAKER_00: Thanks for listening.
• 6:11
  SPEAKER_00: We'll be back tomorrow.