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Transcript

Daily Market Podcast Jul 15 · 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 Wednesday, July 15th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is up four and three quarters at 465.
• 0:11
  SPEAKER_00: November soybeans are up three at 11.94.
• 0:14
  SPEAKER_00: August crude is up 30 cents at 79.60.
• 0:18
  SPEAKER_00: As for corn news this morning, we have fully discussed for multiple weeks the problems in with Brazil's corn crop and the problems with the EU corn crop and the very strong global corn demand.
• 0:32
  SPEAKER_00: And uh we fully discussed even the super strong U.S.
• 0:35
  SPEAKER_00: corn export demand.
• 0:37
  SPEAKER_00: But the CBOT corn market right now only seems to be focused on the size of the U.S.
• 0:43
  SPEAKER_00: crop.
• 0:43
  SPEAKER_00: Nothing else seems to matter.
• 0:45
  SPEAKER_00: Maybe the market needs to solve the question of what size the U.S.
• 0:49
  SPEAKER_00: crop is before it can worry about any of the other stuff.
• 0:52
  SPEAKER_00: Last week we rallied uh CBOT corn on the threat of hot, dry weather.
• 0:58
  SPEAKER_00: USDA corn condition ratings came out on Monday and they actually improved, and then Tuesday we sold off again.
• 1:05
  SPEAKER_00: I strongly remain in the camp that there is much, much more upside to CBOT corn than downside from current price levels.
• 1:13
  SPEAKER_00: But it may take longer time than I expected.
• 1:17
  SPEAKER_00: As for U.S.
• 1:18
  SPEAKER_00: corn demand, uh, if we go through all the different segments here, U.S.
• 1:23
  SPEAKER_00: animal feeding should remain very strong, cattle numbers are steady, cattle weights are huge, hog numbers are steady, chicken numbers are up, ethanol grind remains decent.
• 1:33
  SPEAKER_00: Obviously, U.S.
• 1:34
  SPEAKER_00: corn exports are huge.
• 1:36
  SPEAKER_00: So that all remains supportive, but the market's got to deal with crop size first.
• 1:42
  SPEAKER_00: Once we wrap our brain around that one, here in the near future, then the market will start to trade this other stuff.
• 1:50
  SPEAKER_00: Now let's move on to soybeans.
• 1:52
  SPEAKER_00: CBFT soybeans going forward are as much about U.S.
• 1:57
  SPEAKER_00: crutch margins as they are about global soybean supplies.
• 2:02
  SPEAKER_00: Right now, it appears that we have a decent crop in the U.S.
• 2:05
  SPEAKER_00: and we certainly have plenty of soybeans in South America, and both Brazil and Argentina are expected to expand soybean plantings this fall.
• 2:13
  SPEAKER_00: So unless we have some major yield issue, we should have plenty of soybeans for the foreseeable future.
• 2:20
  SPEAKER_00: But it is hard for U.S.
• 2:22
  SPEAKER_00: soybean prices to break if U.S.
• 2:24
  SPEAKER_00: crushers have big crush margins.
• 2:27
  SPEAKER_00: So far in 2026, the big global supplies of soybeans strongly supported pointed to CBOT soybean prices dropping to near$9.
• 2:41
  SPEAKER_00: But clearly that never happened.
• 2:43
  SPEAKER_00: The main reason was the massive crush margins in the US.
• 2:47
  SPEAKER_00: Crushers could and did pay more for soybeans because they were making so much money.
• 2:53
  SPEAKER_00: So we need to look at crush margins going forward.
• 2:57
  SPEAKER_00: I've got a chart at the bottom of page one.
• 3:00
  SPEAKER_00: CBOT crutch margins remain high through the end of the year.
• 3:04
  SPEAKER_00: If you look at CBOT futures, um the biggest two issues affecting crush margins will be number one, U.S.
• 3:13
  SPEAKER_00: meal exports.
• 3:14
  SPEAKER_00: If US meal exports are small, excuse me, then meal stacks up in the U.S.
• 3:21
  SPEAKER_00: and meal prices fall, and that hurts crush margins.
• 3:25
  SPEAKER_00: And vice versa.
• 3:27
  SPEAKER_00: And number two, crude oil prices.
• 3:30
  SPEAKER_00: With this recent rally in crude oil and heating oil and diesel, CBOT soybean oil has rallied over 10% in the last two weeks.
• 3:41
  SPEAKER_00: So, longer term, I believe that U.S.
• 3:44
  SPEAKER_00: meal exports will not be very good.
• 3:46
  SPEAKER_00: Who knows about crude oil?
• 3:49
  SPEAKER_00: But I'm in the camp that crutch margins should decline.
• 3:54
  SPEAKER_00: In the near term, crutch margins remain decent, and that keeps support under CBOT swabbings.
• 4:00
  SPEAKER_00: Longer term, it is very hard for me to be bullish CBOT swabbing prices.
• 4:04
  SPEAKER_00: And eventually I see CBOT swabbings breaking, but we need crutch margins to erode.
• 4:11
  SPEAKER_00: Moving on to weather, um, obviously we've got uh dry weather uh in the next oh five, six, seven days, uh, particularly in the plain states and over into Iowa and Minnesota and Wisconsin.
• 4:28
  SPEAKER_00: And this heat um remains around through the weekend.
• 4:34
  SPEAKER_00: Uh, particularly South Dakota and Nebraska are getting hammered right now with upper 90s and and temperatures even up to 105.
• 4:44
  SPEAKER_00: But if we look forward next week and the week beyond, it looks like precip is going to be somewhat normal across the cornbell.
• 4:54
  SPEAKER_00: So that's it for today.
• 4:56
  SPEAKER_00: Thanks for listening.
• 4:57
  SPEAKER_00: We'll be back tomorrow.