Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Aug 18

Transcript

Daily Market Podcast Aug 18 · 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 Tuesday, August 18th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is up one and a half at 4.91.
• 0:10
  SPEAKER_00: November soybeans are up six and three quarters at 12.22.3 quarters.
• 0:16
  SPEAKER_00: Decent meal is up$2.30 at$3.20.90.
• 0:20
  SPEAKER_00: And October crude is up 50 cents at 84.30.
• 0:25
  SPEAKER_00: In news outside this morning, as far as the U.S.
• 0:30
  SPEAKER_00: and Iran goes, overnight some Iranian officials were claiming that they are done playing defense and now they are going to go and I quote fully offensive.
• 0:43
  SPEAKER_00: Whatever that's supposed to mean.
• 0:44
  SPEAKER_00: It seems like they've been offensive for quite a while now.
• 0:47
  SPEAKER_00: But evidently Iran is planning a military offensive to break Trump's naval blockade.
• 0:55
  SPEAKER_00: So, whatever this means, quite obviously, this mess between the U.S.
• 0:59
  SPEAKER_00: and Iran is nowhere close to being resolved.
• 1:02
  SPEAKER_00: Therefore, that's going to be supportive to uh crude oil and obviously fuel prices for quite a while, it seems like.
• 1:21
  SPEAKER_00: That's kind of a normal uh progression this time of year to drop about one point a week.
• 1:26
  SPEAKER_00: Also, in ProFarmers ongoing crop tour, they issued summaries in two states last night, Ohio and South Dakota.
• 1:34
  SPEAKER_00: Their field counts imply USDA's corn yields in both states that USDA issued last week were too big.
• 1:42
  SPEAKER_00: Matter of fact, ear counts in both states were the smallest in several years.
• 1:46
  SPEAKER_00: So here we go down that rabbit hole of a potentially smaller corn crop.
• 1:52
  SPEAKER_00: Um also, and this is interesting, the U.S.
• 1:55
  SPEAKER_00: corn crop is now 29% dented.
• 1:58
  SPEAKER_00: Okay.
• 1:59
  SPEAKER_00: If you look at the time periods uh between the U.S.
• 2:02
  SPEAKER_00: crop progress this year, between silking and dough and den, etc., um, it becomes very evident that this corn crop is progressing faster than normal.
• 2:12
  SPEAKER_00: The heat this summer has made this corn crop mature quicker than it should have.
• 2:20
  SPEAKER_00: And that means smaller ears and smaller test weights.
• 2:25
  SPEAKER_00: So again, pointing to a smaller corn crop.
• 2:28
  SPEAKER_00: With USDA's 1.6 billion ending stocks, we cannot afford a smaller U.S.
• 2:36
  SPEAKER_00: corn crop.
• 2:37
  SPEAKER_00: Also, weekly exports last week were a massive 75 million bushels.
• 2:42
  SPEAKER_00: That's more than double the pace we were exporting a year ago.
• 2:45
  SPEAKER_00: I remain bullish CBOT corn, and I am firmly in the camp that any hints of a smaller crop and CBOT corn could become very bullish.
• 2:55
  SPEAKER_00: And quite obviously, we just gave you multiple hints that the crop may be getting smaller.
• 3:00
  SPEAKER_00: As far as soybean news, um the C the uh ProFarmer Tour also offered pod counts.
• 3:08
  SPEAKER_00: They count the number of pods in a three-foot by three-foot square area in the fields.
• 3:12
  SPEAKER_00: And pod counts in both states were the smallest in three years.
• 3:18
  SPEAKER_00: But let's be honest, this is mid-August.
• 3:21
  SPEAKER_00: Knowing what pod counts are, it's really not telling you a lot.
• 3:25
  SPEAKER_00: Um, will the plant keep those pods or abort them?
• 3:29
  SPEAKER_00: Will the pods have two beans or three beans?
• 3:31
  SPEAKER_00: Will the beans be large or small?
• 3:34
  SPEAKER_00: It's so much yet to be determined on this swimming crop.
• 3:38
  SPEAKER_00: But the market will shoot first and ask questions later.
• 3:41
  SPEAKER_00: They will try to glean some information from this data, and so far the data will make the market question if the crop could be smaller.
• 3:51
  SPEAKER_00: Also, yesterday, NOPA, the National Oil Seed Processors Association, issued their uh July crush numbers yesterday at 216 million bushels.
• 4:03
  SPEAKER_00: That was a record soybean crush for July, which makes 16 consecutive um new monthly crush records.
• 4:12
  SPEAKER_00: And I've got a chart of this on the bottom of page one.
• 4:15
  SPEAKER_00: NOPA's data also, and this is rather interesting, also with a record crush, you have a record soybean oil production.
• 4:22
  SPEAKER_00: That's pretty obvious.
• 4:24
  SPEAKER_00: But they also showed at the same time of record oil production a quite significant drawdown in soybean oil stocks.
• 4:34
  SPEAKER_00: So, quite obviously, soybean oil demand was off the charts for July.
• 4:40
  SPEAKER_00: The market yesterday took this as bullish for soybean oil and therefore bullish for CBOT soybeans.
• 4:48
  SPEAKER_00: So the market has pro farmer data questioning if the crop could be smaller, and NOPA data pointing out that we have big crush demand and massive bean oil demand.
• 5:00
  SPEAKER_00: Not too hard to understand why CBOT soybeans were firm yesterday and remained firm this morning.
• 5:07
  SPEAKER_00: Moving on to weather, um, we've got a light-scattered uh system coming across the corn belt uh from Nebraska across Iowa, Indiana, uh, Illinois, and then some light-scattered stuff in the mid-south the next four or five days.
• 5:22
  SPEAKER_00: After that, uh, we're kind of open weather.
• 5:24
  SPEAKER_00: We still got some just smoking hot temperatures in the southwest, uh, Texas, Oklahoma, Kansas, Arkansas, uh, parts of Louisiana and Mississippi the next uh several days.
• 5:38
  SPEAKER_00: And by smoking hot, I mean hundreds plus, and even parts of Oklahoma are over 110s.
• 5:46
  SPEAKER_00: Um, and then I encourage everybody to look at the bottom of page two.
• 5:50
  SPEAKER_00: Uh, this is month to date precip across the Corn Belt, and you can see clearly there's parts of central, east central Illinois across central parts of Indiana that have had massive rain amounts, 10 plus inches.
• 6:07
  SPEAKER_00: Parts of um uh east central Indiana have had over 15 inches of rain so far this month.
• 6:15
  SPEAKER_00: So it's not too hard to understand why you've got several rivers in that area that are above flood stage.
• 6:21
  SPEAKER_00: So specifically, those areas could stand to go without uh moisture here for a little while, but the rest of the cornbelt, particularly the northern cornbelt and western cornbelt, uh, they need more rain than what they've been getting.
• 6:33
  SPEAKER_00: That's it for today.
• 6:34
  SPEAKER_00: Thanks for listening.
• 6:35
  SPEAKER_00: We'll be back tomorrow.