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Daily Market Podcast Oct 9 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with AM6 Capital Management with our daily market letter on Friday morning, uh October 9th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is down a quarter at$5.25.
• 0:13
  SPEAKER_00: November soybeans are up six and a half at$12.94.
• 0:16
  SPEAKER_00: December meal is up$2.20, and November Crude is down$1.10 at$90.40 this morning.
• 0:23
  SPEAKER_00: We got a lot to go through today.
• 0:26
  SPEAKER_00: First off, we got these USDA reports are today.
• 0:30
  SPEAKER_00: And these are going to be super, super critical for determining the near-term direction and even longer term direction of corn and bean prices.
• 0:40
  SPEAKER_00: And USD is going to issue two reports.
• 0:41
  SPEAKER_00: One's going to be the October crop production report, where it updates U.S.
• 0:47
  SPEAKER_00: uh crop estimates, and then the YSD, which is where it updates global uh supply and demand estimates.
• 0:53
  SPEAKER_00: And I've got all the average guesses uh on the top of page one.
• 0:59
  SPEAKER_00: And I still contend that it will be very difficult for the corn market to get a bullish report from USDA today.
• 1:08
  SPEAKER_00: Um the average guess for USD's ending stocks today is 1.694 billion bushels.
• 1:15
  SPEAKER_00: Let's just call it 1.7.
• 1:17
  SPEAKER_00: Okay.
• 1:18
  SPEAKER_00: On the bottom of page one, I have plotted historically uh what does a 1.7 ending stocks number uh estimate that we get in October, what does that mean for December corn?
• 1:31
  SPEAKER_00: And historically, a October stocks estimate of 17 would point towards December corn averaging 450 or less for the next six weeks.
• 1:44
  SPEAKER_00: And this morning is trading at even$5.
• 1:47
  SPEAKER_00: So to justify this current$5 price, we need a much smaller stocks estimate, meaning that USDA needs to really, really cut the yield, or they need to really, really pick up exports, which is zero chance of that.
• 2:04
  SPEAKER_00: Um I think it's just it's gonna be very, very difficult for USDA to give us enough bullish information today to even justify the current price, much less cause us to rally.
• 2:19
  SPEAKER_00: But it is a government report, and there's always some unknown factor, but the odds absolutely favor corn prices going lower, not higher.
• 2:28
  SPEAKER_00: Meanwhile, corn planning in Argentina is now 30% complete.
• 2:32
  SPEAKER_00: This is the fastest pace in at least the last 20 years.
• 2:35
  SPEAKER_00: Um, no planning issues in South America whatsoever right now.
• 2:40
  SPEAKER_00: As far as soybeans go, uh, the market was really watching China yesterday when they got back from their week and a half national holiday.
• 2:50
  SPEAKER_00: What were they gonna be doing buying beans?
• 2:52
  SPEAKER_00: Well, there were zero soybean purchase from the U.S.
• 2:56
  SPEAKER_00: And instead, China bought soybeans from Brazil for November delivery.
• 3:00
  SPEAKER_00: The market did not like this at all and ended the day yesterday down 10 cents.
• 3:06
  SPEAKER_00: Um, as far as the USDA reports today, the market needs, in my opinion, needs bullish numbers at USDA to justify this current high price.
• 3:16
  SPEAKER_00: My fear is that the U.S.
• 3:18
  SPEAKER_00: soybean yield will be unchanged to higher and the any stocks will not be bullish and the market sells off.
• 3:27
  SPEAKER_00: Um, again, this market is all dressed up and no place to go.
• 3:32
  SPEAKER_00: Meanwhile, the U.S.
• 3:33
  SPEAKER_00: Attache in Argentina uh released a report yesterday and they raised the soil being planted area estimate for this upcoming crop season, and now they forecast soybean production at 52.5 million tons, which would be their biggest crop in six years.
• 3:51
  SPEAKER_00: Again, longer term, if weather is okay in South America, then we are headed towards record production levels down there.
• 4:00
  SPEAKER_00: Not good for the soybean crop for soybean prices longer term.
• 4:04
  SPEAKER_00: Um, I really suggest if you have a chance to look at the um uh stocks versus price chart on the bottom of page one today.
• 4:13
  SPEAKER_00: Um, also, uh, let's talk about cattle here for a moment.
• 4:19
  SPEAKER_00: And I've got a chart on the bottom of page two of beef prices.
• 4:23
  SPEAKER_00: They've been mostly flat for the last you know four, five, six weeks.
• 4:27
  SPEAKER_00: This time of year, rallies in beef are mostly unsustainable.
• 4:32
  SPEAKER_00: It's the wrong time of year to be featuring beef in in grocery stores.
• 4:38
  SPEAKER_00: So with so much imported beef coming in, we expect beef prices to be basically flat to lower for the remainder of this year.
• 4:48
  SPEAKER_00: Um, also, we're seeing inventories of beef in coal storage that are growing, also.
• 4:54
  SPEAKER_00: Um, and I've got a chart of that on the bottom of the page, too.
• 4:58
  SPEAKER_00: Right now, beef stocks in the U.S.
• 4:59
  SPEAKER_00: are the largest that we've had in several years uh for this time of year.
• 5:04
  SPEAKER_00: So the point is this if beef prices are steady to lower for the next several months, it's going to be hard for the U.S.
• 5:12
  SPEAKER_00: Packer to ever really pick up kill levels.
• 5:16
  SPEAKER_00: If they were to kill more cattle, then the beef market can't handle it.
• 5:19
  SPEAKER_00: The beef market does not want the current amount of beef that we have.
• 5:23
  SPEAKER_00: So this is not good for cattle prices in the near term for the remainder of this year.
• 5:29
  SPEAKER_00: As far as the Fed cattle go, cash market has basically been flat for six weeks now.
• 5:35
  SPEAKER_00: And we expect cash uh this week to trade around$220 in Nebraska, which is basically flat.
• 5:43
  SPEAKER_00: And Texas is still trading a few dollars premium.
• 5:46
  SPEAKER_00: Uh, we've talked about this that there's a they've already run into their shortage of cattle in Texas.
• 5:52
  SPEAKER_00: But it's hard to get a cattle market to rally when beef has very limited upside.
• 5:57
  SPEAKER_00: And it is costing Packers a ton of money to buy cattle up north and ship them down to Texas, especially with these high freight rates.
• 6:04
  SPEAKER_00: So, in my opinion, cash cattle looks like they're gonna be steady to lower for a little while here.
• 6:11
  SPEAKER_00: As far as feeders, uh feeder imports from Mexico, that is running slower than what the market feared.
• 6:17
  SPEAKER_00: Uh, we have two locations open.
• 6:19
  SPEAKER_00: The first to reopen was Douglas, Arizona on August 24th, and then Santa Teresa or Santa Teresa, however you say that in New Mexico opened, reopened on September 24th.
• 6:30
  SPEAKER_00: And even if USDA reopens several more locations, the imports of feeders are expected to remain only a small fraction of previous years.
• 6:41
  SPEAKER_00: So no big wall of feeders coming in.
• 6:44
  SPEAKER_00: Longer term, we do remain bullish fed cattle prices, but that's after we roll into 2027.
• 6:51
  SPEAKER_00: And cattle numbers begin to tighten up everywhere because of these months after months after months of small placements.
• 6:56
  SPEAKER_00: Feeder prices, we think they're going to stay subdued until we get into 2027.
• 7:02
  SPEAKER_00: Right now, there are just way too many uh big losses on cattle closeouts right now, and feedlots just cannot afford to pay these high feeder prices.
• 7:14
  SPEAKER_00: As far as weather goes, the next four, five, six days, uh, the majority of the Corn Belt, uh, particularly, let's say um Mississippi River and West, and even that includes uh Illinois, parts of northern Indiana, Wisconsin, they've got wide open weather and harvests should just blow and go.
• 7:36
  SPEAKER_00: This uh overnight, the path of this hurricane Isaiah's, if I'm saying that correctly, uh, has shifted a little bit further to the east.
• 7:47
  SPEAKER_00: It's still making landfall just east of Mobile Bay, but the path, once it makes inland, uh, looks like it's gonna hang a right and go up uh towards um western Kentucky and into West Virginia.
• 8:00
  SPEAKER_00: Uh I I've also, they the National Hurricane Center has diminished the precip forecast for what uh Mississippi and Tennessee are supposed to get out of this.
• 8:12
  SPEAKER_00: I think they've still got obviously the coastal areas are getting hosed, and most of uh the state of Alabama and Georgia are still getting pretty decent rainfall.
• 8:22
  SPEAKER_00: But um, the rest of the areas they've backed off of precip amounts.
• 8:26
  SPEAKER_00: That's it for today.
• 8:27
  SPEAKER_00: Thanks for listening.
• 8:28
  SPEAKER_00: Um, I will send out a report at 11 o'clock after USDA numbers come out.
• 8:32
  SPEAKER_00: Take care.