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Transcript

Daily Market Podcast Sep 2 · 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 Wednesday, September 2nd.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is down 8.3 quarters at 537.5.
• 0:12
  SPEAKER_00: November beans are down 15 at 13.02 and a quarter.
• 0:15
  SPEAKER_00: December meal is down 560.
• 0:17
  SPEAKER_00: And October crude is down 50 cents this morning.
• 0:21
  SPEAKER_00: Let's talk about the Black Sea first, because that seems to have knee-jerked our markets around the last several sessions.
• 0:28
  SPEAKER_00: It's very hard to know what all this fighting will ultimately mean for Russia and Ukraine grand exports out of the Black Sea.
• 0:38
  SPEAKER_00: Clearly, right here, right now, there are very few exports leaving that area.
• 0:44
  SPEAKER_00: Export facilities are damaged, and there have been so many vessels in the Black Sea that have been attacked that vessel owners and insurance companies will not allow ships to even go there right now.
• 0:55
  SPEAKER_00: But that's today.
• 0:56
  SPEAKER_00: What about next week?
• 0:57
  SPEAKER_00: What about next month?
• 0:59
  SPEAKER_00: Both nations need the exports.
• 1:01
  SPEAKER_00: Ag exports is a significant part of their economy of both Russia and Ukraine.
• 1:08
  SPEAKER_00: Both Russia and Ukraine grew decent wheat crops this last year.
• 1:12
  SPEAKER_00: Russia's corn crop was okay.
• 1:14
  SPEAKER_00: Ukraine's corn crop was down a little bit.
• 1:17
  SPEAKER_00: We don't know when the bombing in the Black Sea area may subside.
• 1:24
  SPEAKER_00: We don't know how fast repairs can be made to export facilities, but we do know that grain is not moving and grain prices have fallen to very cheap levels in both countries.
• 1:35
  SPEAKER_00: So whenever grain can flow out, there will be a mountain of cheap grain looking for a home very quickly.
• 1:42
  SPEAKER_00: So this thing may be bullish today, but at some unknown point down the road, this thing could be bearish.
• 1:50
  SPEAKER_00: On to corn news.
• 1:51
  SPEAKER_00: As far as corn goes, as far as CBOT corn goes, if you don't like the price one day, just wait till the next day.
• 1:56
  SPEAKER_00: We rallied yesterday on the lack of grain flows from Russia in Ukraine and then gave back the entire rally overnight.
• 2:03
  SPEAKER_00: So I want to review where we are today.
• 2:06
  SPEAKER_00: To start with, the rally from the lows August 11th to the end of August was the largest CBOT corn rally ever in the month of August.
• 2:19
  SPEAKER_00: Also, several weeks ago, U.S.
• 2:21
  SPEAKER_00: corn was the cheapest in the world and U.S.
• 2:23
  SPEAKER_00: corn export demand was smoking red hot.
• 2:27
  SPEAKER_00: Today, U.S.
• 2:28
  SPEAKER_00: Gulf corn is 30 cents a bushel more expensive than Brazil and 60 cents a bushel more expensive than Argentina.
• 2:37
  SPEAKER_00: So today, following this big rally we've recently had, we are now the most expensive corn in the world.
• 2:44
  SPEAKER_00: That clearly does not bode well for export demand.
• 2:48
  SPEAKER_00: Also, as of this morning, we are now very close to an all-time record long position for speculators in CBOT corn.
• 2:57
  SPEAKER_00: The corn market is assuming a big decline in the U.S.
• 3:01
  SPEAKER_00: corn yield, no grain exports from Russia or Ukraine for a long time, and fantastic U.S.
• 3:08
  SPEAKER_00: corn demand forever.
• 3:10
  SPEAKER_00: Let's not forget we've got the bulk of corn harvest right ahead of us.
• 3:14
  SPEAKER_00: I'm not in the business of calling highs and lows.
• 3:16
  SPEAKER_00: Quite frankly, that's an impossible job.
• 3:19
  SPEAKER_00: But I am in the business of recognizing what is pushing a market and trying to figure out when we have pushed it far enough.
• 3:26
  SPEAKER_00: And to me, we have pushed CBOT corn high enough for now.
• 3:31
  SPEAKER_00: We need some kind of new, really bullish information to keep us going higher right in the face of harvest.
• 3:40
  SPEAKER_00: I do remain very bullish longer term, like next spring and summer, just not right now.
• 3:47
  SPEAKER_00: As far as soybean news, um the CBFT soybean market took the two-point drop in good to excellent crop ratings on Monday afternoon to mean that the U.S.
• 3:59
  SPEAKER_00: soybean crop is getting smaller.
• 4:00
  SPEAKER_00: And the market ran with that yesterday.
• 4:03
  SPEAKER_00: And then EPA reallocating the waivers for biofuel usage means that crush in the U.S.
• 4:09
  SPEAKER_00: is gonna stay big.
• 4:12
  SPEAKER_00: The nearby swimming contract, the uh September, I mean sorry, the November at this point, hit the highest nearby price since December 2023, yesterday.
• 4:26
  SPEAKER_00: On this rally, CBOT soybeans uh and this rally of fuel and higher freight rates, all of a sudden, U.S.
• 4:36
  SPEAKER_00: Gulf soybeans have become more expensive than Brazil, especially when you calculate landed prices to both Europe and Asia.
• 4:46
  unknown: U.S.
• 4:47
  SPEAKER_00: soybean export demand was getting better.
• 4:49
  SPEAKER_00: That's not the case anymore today.
• 4:52
  SPEAKER_00: Like corn, we have had speculators plow into new loans and we have pushed the market a whole lot higher.
• 4:59
  SPEAKER_00: With the USDA report coming next week, the market will need to see a smaller crop from USDA.
• 5:06
  SPEAKER_00: If we don't get that, watch out below.
• 5:08
  SPEAKER_00: It could be quite nasty.
• 5:11
  SPEAKER_00: Um, as far as weather, again, we've got uh system coming across Minnesota, Wisconsin into Michigan the next several days.
• 5:19
  SPEAKER_00: The rest of the country, other than uh, you know, this what's remaining of this tropical storm uh in Louisiana and maybe southeastern part of Texas, the rest of the country is basically dry.
• 5:31
  SPEAKER_00: Uh, and we do have some smoking hot temperatures still in there.
• 5:37
  SPEAKER_00: Uh, Nebraska, parts of Iowa, uh Kansas, uh, Missouri are gonna see hundreds, uh, maybe 105s today, tomorrow, Friday.
• 5:50
  SPEAKER_00: We need this heat to dissipate, and we need some better rains to show back up.
• 5:55
  SPEAKER_00: Uh, if if not, the ending for this warming crop is just not very good.
• 6:00
  SPEAKER_00: I've also got a map uh on the bottom of page two showing rains in August, and you can see there are clear areas in Illinois, India, and Ohio that were clearly much wetter than normal in August.
• 6:16
  SPEAKER_00: And then you've got areas northwest and southwest that were much drier than normal.
• 6:22
  SPEAKER_00: So August seems to be the month of haves and have nots.
• 6:26
  SPEAKER_00: Either you got not nearly enough rain or way too much.
• 6:30
  SPEAKER_00: So, um, anyway, that's it for today.
• 6:33
  SPEAKER_00: Uh again, I just think we have pushed this cornice or being markets uh plenty high enough for now.
• 6:39
  SPEAKER_00: So that's it.
• 6:40
  SPEAKER_00: Thanks for listening.
• 6:41
  SPEAKER_00: We'll be back tomorrow.