Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Aug 12

Transcript

Daily Market Podcast Aug 12 · 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 Wednesday morning, August 12th.
• 0:06
  SPEAKER_00: Walking in this morning, we have December corn up 3.5 at 464.
• 0:09
  SPEAKER_00: We have November soybeans up 4.3 quarters at$11.73.5.
• 0:14
  SPEAKER_00: December meal is up$1.90 at$312.80.
• 0:18
  SPEAKER_00: September crude is up 50 cents at$83.70.
• 0:22
  SPEAKER_00: So today is USDA Report Day.
• 0:26
  SPEAKER_00: And that offers a lot of volatility today.
• 0:29
  SPEAKER_00: Today at 11 o'clock, USDA will issue two very important reports.
• 0:33
  SPEAKER_00: One is their August crop production report.
• 0:36
  SPEAKER_00: This is where USDA updates their estimates of U.S.
• 0:39
  SPEAKER_00: row crop production, amongst other things.
• 0:42
  SPEAKER_00: They will utilize field sampling, farmer surveys, and certified acreage data to adjust their estimates of planted area, harvested area, and yield.
• 0:54
  SPEAKER_00: This is the first new yield estimate of the year that USDA will use that is not a calculated trend yield.
• 1:04
  SPEAKER_00: So this is really their first shot across the bowel at what they actually believe the crop looks like.
• 1:10
  SPEAKER_00: Also, USDA will issue its monthly Wisde report, which you all should be familiar with by now, which is their World Agricultural Supply and Demand Estimates.
• 1:20
  SPEAKER_00: In this report, they adjust global supply and demand estimates for row crops.
• 1:25
  SPEAKER_00: Historically speaking, this August crop report day is very volatile for CBOT corn and soybean markets.
• 1:34
  SPEAKER_00: So specific to corn, the two big factors to watch today are the U.S.
• 1:39
  SPEAKER_00: corn yield and any changes to U.S.
• 1:42
  SPEAKER_00: planted acres.
• 1:44
  SPEAKER_00: In our world today, so many people have access to AI systems and they utilize satellite-based vegetative health data, very detailed weather data, and USDA weekly condition ratings, all to estimate U.S.
• 2:01
  SPEAKER_00: crop yields.
• 2:02
  SPEAKER_00: In our firm, we do the same thing.
• 2:04
  SPEAKER_00: We have access to the same data.
• 2:06
  SPEAKER_00: So at the end of the day, so many people are looking at the same data and all coming up with the same answer.
• 2:14
  SPEAKER_00: So therefore, today the average market guess for the U.S.
• 2:18
  SPEAKER_00: corn yield is 182.7, which is very close to USDA's trend yield of 183 that they've been using for months.
• 2:28
  SPEAKER_00: The major problem, the obvious problem here, is that USDA will be utilizing a very different set of data to update their yields today.
• 2:39
  SPEAKER_00: And this means that we run the risk that a whole lot of people could be very wrong at 11 o'clock this morning.
• 2:46
  SPEAKER_00: So again, I mean, this is not a monkey throwing a dart, but there is a risk factor that they just come out something very different than the rest of us using.
• 2:57
  SPEAKER_00: Also, there is a wide range of opinions in the market on U.S.
• 3:02
  SPEAKER_00: corn planted area.
• 3:04
  SPEAKER_00: Some believe that USDA could increase corn planted acres at least a million acres.
• 3:10
  SPEAKER_00: I'm not in that camp, but there are quite a few who are.
• 3:14
  SPEAKER_00: So the end result is today could be a wild ride for corn.
• 3:18
  SPEAKER_00: So if you have orders in the market, please be careful.
• 3:21
  SPEAKER_00: Moved on to soybeans.
• 3:24
  SPEAKER_00: Um soybeans could be just as volatile today.
• 3:27
  SPEAKER_00: Obviously, USDA will adjust U.S.
• 3:29
  SPEAKER_00: yield and acres and crop size.
• 3:31
  SPEAKER_00: But also, now that China is in uh on a regular basis buying a lot of U.S.
• 3:37
  SPEAKER_00: beans, and it looks like there's been no announcement, but it certainly looks like they're in the process of abiding by their latest agreement to buy U.S.
• 3:50
  SPEAKER_00: beans.
• 3:50
  SPEAKER_00: So, what does USDA do with U.S.
• 3:54
  SPEAKER_00: soybean export demand in their numbers today?
• 3:57
  SPEAKER_00: And on top of that, global veg oil demand for biofuels is growing much faster than what USDA is showing in its latest numbers.
• 4:07
  SPEAKER_00: Do they make adjustments there also?
• 4:09
  SPEAKER_00: Don't know.
• 4:10
  SPEAKER_00: Again, it just makes for a lot of moving parts.
• 4:14
  SPEAKER_00: And then, let's look further down the road, let's be honest, a big portion of the U.S.
• 4:18
  SPEAKER_00: soybean yield is determined by August and first half September rains.
• 4:24
  SPEAKER_00: And so soybeans still have a very big part of the growing season yet to go.
• 4:28
  SPEAKER_00: And as of today, in my opinion, we could use more precip and less hot temperatures in the forecast.
• 4:35
  SPEAKER_00: So there's that we got to deal with.
• 4:38
  SPEAKER_00: At the bottom of page two today, I'm sorry, bottom of page one, I've got the average market guesses for yield production and ending stocks.
• 4:46
  SPEAKER_00: Um, so please take a look at those.
• 4:48
  SPEAKER_00: I will update those when uh USDA comes out with their report at 11 a.m.
• 4:51
  SPEAKER_00: this morning central time.
• 4:53
  SPEAKER_00: As far as weather goes, we've got this system coming across uh Iowa, Illinois, Indiana, parts of Ohio uh the next several days.
• 5:02
  SPEAKER_00: Following that, we go back to very little, you know, not much rainfall in the Corn Belt.
• 5:09
  SPEAKER_00: In my opinion, we could use more.
• 5:10
  SPEAKER_00: It's not dry, but it's uh in the tune of you know half to three-quarter inch a week.
• 5:18
  SPEAKER_00: We could use more than that.
• 5:19
  SPEAKER_00: We still got some smoking hot temperatures for several days.
• 5:23
  SPEAKER_00: Um Kansas, particularly Kansas uh and Oklahoma, but it looks like uh real crop producers in Kansas are just getting slapped in the face with these hot temperatures.
• 5:37
  SPEAKER_00: Uh, and some areas, the bulk of the state is gonna be for the next two days 105 over, and even some areas um in the central part of the state over 110 degrees for several days in a row.
• 5:50
  SPEAKER_00: Uh, this is just not good good for yields there.
• 5:53
  SPEAKER_00: Uh, and then let's shift over to Europe for a minute.
• 5:57
  SPEAKER_00: This is round five of uh super hot uh temperatures coming in for European grain-producing areas, particularly uh Spain and France.
• 6:09
  SPEAKER_00: And the I've got a map in there of the high temperature forecasts for tomorrow are north of 105 degrees.
• 6:17
  SPEAKER_00: Um, and over in particular France.
• 6:21
  SPEAKER_00: So this is round five of uh these heat waves coming through and absolutely just devastating crops and wildfires uh all over France.
• 6:32
  SPEAKER_00: So again, this is just hurting uh European corn production, which ultimately means more, much more corn import demand than normal.
• 6:41
  SPEAKER_00: So, again, that's it for today.
• 6:44
  SPEAKER_00: Um thanks for listening, and I will send out an update when USDA numbers come out at 11 o'clock.
• 6:50
  SPEAKER_00: Have a good day.