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Transcript

Daily Market Podcast Aug 3 · 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 Monday, August 3rd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down three and three quarters at 460 and a quarter.
• 0:11
  SPEAKER_00: November beans are down nine and a half at 1178.
• 0:14
  SPEAKER_00: December meal is down 250 at 318.70.
• 0:18
  SPEAKER_00: And September crude is down 570 this morning at 79 even.
• 0:24
  SPEAKER_00: As for corn news, uh weekend rains help soil moisture across Minnesota, Wisconsin, eastern part of Iowa, Missouri, Illinois, Indiana.
• 0:37
  SPEAKER_00: However, the next five to seven days, the forecast calls for near to below normal precip across most of the cornbelt and very limited rains in the plain states.
• 0:46
  SPEAKER_00: And temperatures are expected to be normal to above normal in the cornbelt and again very hot in the plain states.
• 0:54
  SPEAKER_00: So these weekends' rains may have helped soil moisture levels for today, but really only just for a short bit.
• 1:02
  SPEAKER_00: This corn crop needs more rain and certainly needs a break in these temperatures.
• 1:07
  SPEAKER_00: Also, this morning, crude oil is down pretty hard after several Middle Eastern nations pressured President Trump to halt attacks on Iran in hopes of some diplomatic resolution.
• 1:19
  SPEAKER_00: Who knows how that's going to work out?
• 1:21
  SPEAKER_00: Given this weekend rains, we expect the U.S.
• 1:23
  SPEAKER_00: corn ratings, the good to excellent condition ratings to decline 1% this afternoon.
• 1:29
  SPEAKER_00: That's a pretty normal decline for this type of year.
• 1:33
  SPEAKER_00: Damage to the U.S.
• 1:34
  SPEAKER_00: corn crop has clearly been done, already been done in the plain states, and the market has already factored that in.
• 1:41
  SPEAKER_00: But today it seems like the crop in the central and eastern part of the U.S.
• 1:45
  SPEAKER_00: corn belt seems to be doing okay.
• 1:48
  SPEAKER_00: As such, the corn market is looking for a direction this morning.
• 1:52
  SPEAKER_00: So a big drop like we've got in crude oil this morning is dragging CBOT corn lower today.
• 1:59
  SPEAKER_00: We continue to believe that CBOT corn will bounce around erratically for the next week or so until we get past the August 12th USDA crop report.
• 2:08
  SPEAKER_00: Longer term, we remain bullish CBOT corn.
• 2:11
  SPEAKER_00: Demand is just, quite frankly, way too big.
• 2:14
  SPEAKER_00: As for soybeans, uh with the weekend rains and the expected crop condition ratings, we would argue that today we still have a U.S.
• 2:22
  SPEAKER_00: soybean yield that is at trend or maybe even slightly above trend.
• 2:27
  SPEAKER_00: But at the same time, U.S.
• 2:29
  SPEAKER_00: demand for soybeans is record large.
• 2:32
  SPEAKER_00: Crush rates in the United States continue to be record large month after month after month.
• 2:36
  SPEAKER_00: And we even have several crush plants that are expanding.
• 2:40
  SPEAKER_00: U.S.
• 2:40
  SPEAKER_00: crush margins are huge.
• 2:44
  SPEAKER_00: And as you can see, I've got a chart on the bottom of page one.
• 2:48
  SPEAKER_00: You can see in that chart that U.S.
• 2:50
  SPEAKER_00: uh soybeans are cheaper than Brazilian beans for each of the next four or five months.
• 2:56
  SPEAKER_00: So as a result, U.S.
• 2:58
  SPEAKER_00: export demand just gets bigger and bigger.
• 3:00
  SPEAKER_00: Not just to China, but to the rest of the world.
• 3:03
  SPEAKER_00: This big soybean demand should keep support under CBOT soybeans going forward.
• 3:08
  SPEAKER_00: At least until we get past, I think, past the month of August and we see what this U.S.
• 3:13
  SPEAKER_00: crop really looks like.
• 3:14
  SPEAKER_00: We've still got a long way to go for this crop.
• 3:17
  SPEAKER_00: And then let's not overlook the fact that this back and forth in crude oil will continue to knee-jerk swimming prices around.
• 3:25
  SPEAKER_00: So until we get the August crop report out of the way next week and you know, see what the weather looks like after that, we could see CBOT swimming prices wander around erratically looking for a direction.
• 3:40
  SPEAKER_00: Moving on to weather, um we've got uh a little bit of rain coming across uh this week across northern parts of Illinois.
• 3:50
  SPEAKER_00: That's really about the only place in Cornbelt that's gonna get a decent rain.
• 3:53
  SPEAKER_00: And then next week we do increase rain chances in parts of the central and eastern cornbelt.
• 3:59
  SPEAKER_00: The plain states still are gonna be very limited, and we continue to have uh some really hot temperatures in the plains, particularly the southern plains, but even most of the cornbelt remains above normal to even much above normal over the uh 6 to 10 and even 8 to 14 day time period.
• 4:18
  SPEAKER_00: So we need a break in these temperatures.
• 4:20
  SPEAKER_00: That's it for today.
• 4:22
  SPEAKER_00: Thanks for listening.
• 4:22
  SPEAKER_00: We'll be back tomorrow.