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Transcript

Daily Market Podcast May 13 · 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 for Wednesday, May 13th.
• 0:06
  SPEAKER_00: Walking in this morning, we've got July corn up one cent at 480 and three quarters.
• 0:11
  SPEAKER_00: We've got July soybeans up two and three quarters at 12.29 and a half.
• 0:16
  SPEAKER_00: And we've got June crude down 40 cents at 101.80.
• 0:21
  SPEAKER_00: As far as corn news goes, yesterday we learned an awful lot from USDA's Wisde Report.
• 0:28
  SPEAKER_00: The U.S.
• 0:29
  SPEAKER_00: corn numbers were not all that surprising.
• 0:32
  SPEAKER_00: However, the numbers for the rest of the world were very telling.
• 0:36
  SPEAKER_00: USDA confirmed a lot of what we've been hearing.
• 0:40
  SPEAKER_00: Smaller area, planted area going to urea consuming grains around the world.
• 0:46
  SPEAKER_00: I'm going to say that again.
• 0:48
  SPEAKER_00: Smaller planted area going to urea consuming grains around the world.
• 0:54
  SPEAKER_00: I cannot emphasize enough how big of a deal this could become.
• 0:59
  SPEAKER_00: Several points of reference here.
• 1:02
  SPEAKER_00: Number one, USDA lowered 2627 corn area.
• 1:06
  SPEAKER_00: That's the crop that we're planting right now, or will be planting this fall in South America.
• 1:11
  SPEAKER_00: They lowered planting area in the EU, in Ukraine, in Argentina, in South Africa.
• 1:18
  SPEAKER_00: USDA also lowered 2627 wheat area in Canada, in Ukraine, in Australia, in Argentina.
• 1:26
  SPEAKER_00: All of this relates to urea.
• 1:28
  SPEAKER_00: Number three, USDA lowered rice area in multiple large producers around the world.
• 1:35
  SPEAKER_00: All of this relates to high fertilizer prices.
• 1:39
  SPEAKER_00: You can throw barley into that mix as well.
• 1:42
  SPEAKER_00: We don't have an issue today.
• 1:45
  SPEAKER_00: We do have a lot smaller planted area to grains around the world.
• 1:52
  SPEAKER_00: So now we have zero room for any kind of crop issues.
• 1:57
  SPEAKER_00: Zero.
• 2:17
  SPEAKER_00: And then some random day, which was yesterday in Kansas City Wheat, and again overnight, some random day we walk in and you have a hot dry weather forecast, or you get a small crop estimate, or something that tells the market we have an issue, and CBOT corn does the same thing that Kansas City Wheat did yesterday, it just explodes higher.
• 2:40
  SPEAKER_00: That's what I fear is going to happen in our corn market at some point down the road.
• 2:45
  SPEAKER_00: Moving on to soybeans, uh USDA's report yesterday was friendly due to their larger than expected increase in U.S.
• 2:53
  SPEAKER_00: crush.
• 2:54
  SPEAKER_00: USDA has soybean crush this next year going up 120 million bushels.
• 2:59
  SPEAKER_00: This seems rather big to me, but irregardless, it's what we're going to have to live with in USDA's balance sheets for quite a while.
• 3:07
  SPEAKER_00: However, on the flip side, USDA has soybean area in Brazil for this next crop year going up 3%.
• 3:15
  SPEAKER_00: They have soybean area in Argentina going up 5%.
• 3:18
  SPEAKER_00: This is due to the loss of corn area.
• 3:22
  SPEAKER_00: This is going to be the same around the world.
• 3:24
  SPEAKER_00: Grain area going down, oil seed areas going up.
• 3:29
  SPEAKER_00: In the near term, I'm still in the camp that demand for soybean products is very strong, and that keeps CBOT soybeans well supported in the short run.
• 3:40
  SPEAKER_00: But I do have a question here.
• 3:43
  SPEAKER_00: Meal export demand may soon fall off due to the increased exports coming out of Argentina.
• 3:50
  SPEAKER_00: That's something we really need to be watching.
• 3:52
  SPEAKER_00: And further down the road, the big crop in the U.S., assuming we make a big crop, followed by the record large crops coming in South America, could prove to be bearish later on.
• 4:05
  SPEAKER_00: But that's much later.
• 4:08
  SPEAKER_00: That's much further down the road, and that's a problem for another day.
• 4:13
  SPEAKER_00: On to weather.
• 4:16
  SPEAKER_00: In the short run, in the next four or five days, we've got increasing rains in the north central corn belt.
• 4:22
  SPEAKER_00: Pretty light though.
• 4:24
  SPEAKER_00: You follow that up early next week by uh early to mid next week by some pretty decent uh one to one and a half inch rains coming across Missouri, Arkansas, Illinois, Tennessee, Kentucky area.
• 4:42
  SPEAKER_00: But crops are mostly planted in those states.
• 4:44
  SPEAKER_00: Uh maybe Missouri may be the only ones kind of behind.
• 4:47
  SPEAKER_00: So I think this is really not going to slow any, slow planting down much at all.
• 4:52
  SPEAKER_00: Um I do want to point out, uh I've got two maps in here on hot on uh daytime high temperatures for Thursday and Friday.
• 5:02
  SPEAKER_00: And we've got some smoking hot temperatures coming to um West Texas, Oklahoma panhandle into southwest and south central Kansas.
• 5:11
  SPEAKER_00: On Thursday, you've got 95 200s, and on Friday, you've got some temperatures going up uh well above 100 to 105 plus.
• 5:20
  SPEAKER_00: So those wheat crops that are already drought reduced are going to get a slap in the face from 100 degree temperatures.
• 5:29
  SPEAKER_00: This ain't helping their cause at all.
• 5:31
  SPEAKER_00: Thanks for listening.
• 5:33
  SPEAKER_00: That's it for today.
• 5:34
  SPEAKER_00: We'll be back tomorrow.
• 5:35
  SPEAKER_00: Thanks a lot.