Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Jun 22

Transcript

Daily Market Podcast Jun 22 · 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 Monday, June 22nd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down a quarter at 443 and three-quarters.
• 0:10
  SPEAKER_00: November soybeans are up four and a quarter at 1147.
• 0:14
  SPEAKER_00: August crude is down$1.20 at$74.60.
• 0:19
  SPEAKER_00: Starting off this morning, uh we need to discuss the U.S.-Iranian talks.
• 0:23
  SPEAKER_00: Uh talks occurred over the weekend between U.S.
• 0:27
  SPEAKER_00: and Iran in Switzerland.
• 0:30
  SPEAKER_00: However, over the weekend, Israel attacked Hezbollah in Lebanon and Iran did not like that.
• 0:37
  SPEAKER_00: So Iran announced that the Strait of Ramuz is no longer open.
• 0:44
  SPEAKER_00: That's open for debate this morning because news sources state that ships are still transiting the strait, but just in far less numbers.
• 0:53
  SPEAKER_00: So we don't really know.
• 0:56
  SPEAKER_00: But irregardless, talks continued between the U.S.
• 0:59
  SPEAKER_00: team led by J.D.
• 1:00
  SPEAKER_00: Vance and Iranian officials.
• 1:02
  SPEAKER_00: The negotiations ended several hours ago, and J.D.
• 1:06
  SPEAKER_00: Vance has made several statements this morning that one, they made good progress, uh whatever that means.
• 1:13
  SPEAKER_00: And two, uh, this is the interesting part, if any Iranian banking accounts are ever unfrozen, that money will have to be used to buy U.S.
• 1:23
  SPEAKER_00: goods.
• 1:24
  SPEAKER_00: And he specifically stated soy, corn, and wheat.
• 1:29
  SPEAKER_00: And in one interview, JD Vann stated, and I quote, they're going to make American farmers richer to feed the Iranian deal.
• 1:38
  SPEAKER_00: So we'll see what that means.
• 1:41
  SPEAKER_00: Uh as for corn news, uh, weekly U.S.
• 1:44
  SPEAKER_00: corn export sales last week continue to be big, including, and it has a couple of interesting things in export sales, um, one of which was including a big corn sale to Spain.
• 1:55
  SPEAKER_00: Spain usually buys quite a bit of their corn from South America, but as we've stated in recent days, U.S.
• 2:01
  SPEAKER_00: Gulf corn is cheaper than Brazil.
• 2:04
  SPEAKER_00: So again, it just means U.S.
• 2:06
  SPEAKER_00: export business remains super strong.
• 2:09
  SPEAKER_00: The second interesting thing in the export sales report was China showed up buying U.S.
• 2:15
  SPEAKER_00: sorghum.
• 2:16
  SPEAKER_00: So maybe this is the first shot across the bow.
• 2:20
  SPEAKER_00: Uh, everything continues to point toward China buying a lot of U.S.
• 2:24
  SPEAKER_00: corn.
• 2:25
  SPEAKER_00: Um, so, but so far, they have not made any corn purchases.
• 2:30
  SPEAKER_00: Uh, so the market's kind of a wait-and-see attitude as far as that goes.
• 2:35
  SPEAKER_00: As for European weather that we've talked about quite a bit recently, uh, they continue to be hot and dry, very hot.
• 2:43
  SPEAKER_00: Um, multiple days this week are 100 degrees to even over 105 degrees in France.
• 2:49
  SPEAKER_00: And France is uh the EU's largest corn producer.
• 2:53
  SPEAKER_00: If you add the precip forecast to the end of the from now to the end of the month, and then you total up all of June precip for France's corn area, they will be somewhere in the neighborhood of 30 to 40 percent of normal with several weeks of way, way above normal uh temperatures.
• 3:17
  SPEAKER_00: So not good for their corn crop.
• 3:19
  SPEAKER_00: Again, that just points towards bigger import demand down the road.
• 3:23
  SPEAKER_00: Meanwhile, whether in U.S.
• 3:24
  SPEAKER_00: crop remains non-threatening, uh, I still remain, and I'm I'm maybe a little biased here because I fully believe that China's gonna come in here buying quite a bit of corn from the US, but I remain longer-term bullish CBOT corn and brakes are to be bought.
• 3:41
  SPEAKER_00: Moving on to soybeans, uh, let's I want to talk about crush margins today.
• 3:46
  SPEAKER_00: Uh CBOT crush margins are still big, um, even though they're down quite a bit.
• 3:52
  SPEAKER_00: Uh, if let's break apart the pieces, if we look at meal, since mid-May, soybean meal has broken some$40 off its highs.
• 4:00
  SPEAKER_00: If you look at bean oil, they're down 10 cents uh since early June.
• 4:04
  SPEAKER_00: That's 12%.
• 4:05
  SPEAKER_00: That's a big drop, mainly following crude oil lore.
• 4:10
  SPEAKER_00: Uh so if we look at uh CBOT crush margins since June 1, we have seen uh board crush margins drop$1.25.
• 4:19
  SPEAKER_00: And I've got a chart at the bottom of page one today.
• 4:22
  SPEAKER_00: However, crush margins are still very high historically.
• 4:28
  SPEAKER_00: So big crush margins keep crush rates big and keeps big meal supplies in the United States.
• 4:35
  SPEAKER_00: With meal exports starting to slow, I think uh meal supplies in the U.S.
• 4:40
  SPEAKER_00: just continue to build uh bigger and bigger.
• 4:43
  SPEAKER_00: Um, however, and and and big meal supplies obviously keep U.S.
• 4:48
  SPEAKER_00: meal prices low.
• 4:50
  SPEAKER_00: However, U.S.
• 4:51
  SPEAKER_00: soybean exports are improving.
• 4:54
  SPEAKER_00: We've talked about this, we are price competitive with South America.
• 4:57
  SPEAKER_00: If China does come in and buy this 25 million tons of U.S.
• 5:01
  SPEAKER_00: beans, uh, which I believe they will do, then we tighten up bean supplies and bean prices firm.
• 5:09
  SPEAKER_00: That would push meal prices higher also.
• 5:12
  SPEAKER_00: I think today this is the biggest risk to higher meal prices is China coming in buying U.S.
• 5:18
  SPEAKER_00: beans and the whole structure of the whole market goes higher.
• 5:21
  SPEAKER_00: China was on holiday most of last week, and the market will be closely watching day by day to see if China comes in and buys U.S.
• 5:29
  SPEAKER_00: beans this week.
• 5:31
  SPEAKER_00: I think CBOT soybeans could be quite erratic in the coming several weeks.
• 5:36
  SPEAKER_00: U.S.
• 5:36
  SPEAKER_00: weather is okay, but we still have over 3 million acres of bean left to plant, and that's a big question mark.
• 5:42
  SPEAKER_00: Will all of that get planted or not?
• 5:45
  SPEAKER_00: Also, will China buy U.S.
• 5:47
  SPEAKER_00: beans?
• 5:48
  SPEAKER_00: We think the answer is overwhelmingly yes, but the market seems to be taking a wait and see attitude.
• 5:55
  SPEAKER_00: Um moving on to weather.
• 5:57
  SPEAKER_00: Uh we continue to have uh good rains across the central and southern parts of the uh of the US, uh, particularly in the next several days.
• 6:09
  SPEAKER_00: Um, but I really want to focus on Europe.
• 6:12
  SPEAKER_00: Uh the main corn growing areas in Europe are still uh continue to get well below normal pre-sip, and they have got temperatures most of the next 10 days are going to be way, way above normal.
• 6:26
  SPEAKER_00: And particularly the next four or five days, you've got temperatures in Spain and France uh over 105 degrees.
• 6:33
  SPEAKER_00: This is just bad, bad news for the corn crop.
• 6:36
  SPEAKER_00: Anyway, that's it for today.
• 6:38
  SPEAKER_00: Thanks for listening.
• 6:39
  SPEAKER_00: We'll be back tomorrow.