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Daily Market Podcast Sep 17 · 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 Thursday morning, September 17th.
0:07
SPEAKER_00: Walking in this morning, December corn is down one and a quarter at 5.33 and a quarter.
0:11
SPEAKER_00: November soybeans are down one quarter at 1337.
0:16
SPEAKER_00: December meal is up five at 370.7.
0:20
SPEAKER_00: And October crude is down$1.80 at$100.60 a barrel.
0:26
SPEAKER_00: It's first corn news this morning.
0:28
SPEAKER_00: CBOT corn is bouncing around like it is hunting for a direction to go.
0:34
SPEAKER_00: But this morning, it's interesting enough that we're trading the exact same price that we were trading two weeks ago.
0:41
SPEAKER_00: So we've been doing this for two weeks.
0:43
SPEAKER_00: And it's not helping that energy markets are extremely volatile.
0:46
SPEAKER_00: At one point yesterday, crude oil was trading as high as$106 a barrel.
0:50
SPEAKER_00: This morning it's trading$100.
0:54
SPEAKER_00: Meanwhile, U.S.
0:56
SPEAKER_00: domestic uh corn demand remains super strong.
0:59
SPEAKER_00: Weekly U.S.
1:00
SPEAKER_00: ethanol production was last week was 7.7 million barrels.
1:04
SPEAKER_00: There's a chart of this on the bottom of page one.
1:06
SPEAKER_00: That's up 1% from a year ago.
1:09
SPEAKER_00: And if you take a look at the chart, you can see that ethanol production week after week after week is remaining super strong.
1:17
SPEAKER_00: And exports, U.S.
1:19
SPEAKER_00: ethanol exports are big.
1:21
SPEAKER_00: And with fuel prices high, ethanol production margins in the U.S.
1:26
SPEAKER_00: are really good right now.
1:28
SPEAKER_00: So corn demand going to ethanol stays big.
1:32
SPEAKER_00: The corn market will be watching this Trump Z meeting at the White House next week for any news on China buying U.S.
1:40
SPEAKER_00: grains.
1:40
SPEAKER_00: If you recall, at China, I mean sorry, not China, at Trump's meeting in Beijing in March, Trump declared that China had agreed to buy$17 billion worth of U.S.
1:54
SPEAKER_00: ad goods per year for the next three years.
1:57
SPEAKER_00: China has never admitted to that agreement and certainly has not bought any corn.
2:02
SPEAKER_00: Under Trump's version of the so-called agreement, China agreed to buy$17 billion of USA goods, and that's you know quite a large category there.
2:16
SPEAKER_00: And in return, Trump would cut tariffs that would amount to somewhere between$70 and$80 billion a year in savings to China.
2:28
SPEAKER_00: Mathematically, this seems like a no-brainer for China.
2:31
SPEAKER_00: You spend$17 and you get at least$70 in return.
2:35
SPEAKER_00: But it's quite obviously never that simple.
2:37
SPEAKER_00: If China does agree to this, then they would very likely, that would very likely amount to somewhere between six and eight million tons of corn.
2:47
SPEAKER_00: At least.
2:49
SPEAKER_00: And that would be bullish.
2:51
SPEAKER_00: Next week the market will be closely watching for any headlines, any news on this, any agreements that are made.
2:58
SPEAKER_00: Until then, we continue bouncing around and CBOT corn trade ends up trading sideways and going nowhere.
3:06
SPEAKER_00: As far as soybeans go, China has mostly fulfilled the agreement to buy 12 million tons of U.S.
3:13
SPEAKER_00: soybeans.
3:14
SPEAKER_00: Now, let's not get confused.
3:17
SPEAKER_00: This was a separate agreement from the 17 billion made this spring.
3:21
SPEAKER_00: This was an agreement made last fall.
3:25
SPEAKER_00: So, like corn, the soybean market will be closely watching this U.S.
3:31
SPEAKER_00: China meeting next week.
3:34
SPEAKER_00: Meanwhile, in China, crush margins, uh soybean crush margins continue to be negative.
3:40
SPEAKER_00: Soybean crush rates are declining week after week after week.
3:44
SPEAKER_00: And today, if China did want to buy soybeans with high fuel prices and high ocean freight rates, Brazilian soybeans and Argentine soybeans are cheaper than U.S.
3:56
SPEAKER_00: soybeans landed China.
3:59
SPEAKER_00: So that also means that we are now losing export business from other importing nations at the same time.
4:07
SPEAKER_00: Meanwhile, this erratic energy market is knee-jerking bean oil around like a kite in a storm, which is not helping soybeans at all.
4:17
SPEAKER_00: So, like corn, the soybean market will be looking for news next week on this potential Chinese business.
4:23
SPEAKER_00: Until then, we likely trade erratically and mostly trade sideways and go nowhere.
4:30
SPEAKER_00: As far as weather goes, we've still got this big system coming across Iowa, uh, parts of Minnesota, Wisconsin, northern Illinois the next several days.
4:40
SPEAKER_00: After that, the Corn Belt mostly dries up.
4:43
SPEAKER_00: We do have a tropical storm.
4:49
SPEAKER_00: Uh, it's not a named storm yet, but there is a storm that's out in the Atlantic that looks to be headed straight into the Carolinas, um, and it'll get there sometime early middle part of next week.
5:02
SPEAKER_00: Um, and you can see that on the weather maps where late next week they got some pretty heavy rains right on the coastal areas there.
5:11
SPEAKER_00: Heat continues in the mid-south from Texas all the way up into central and southern Illinois, uh, Kentucky, Tennessee, down in Mississippi, and and back in Louisiana.
5:25
SPEAKER_00: And this is upper 90s into low 100s uh for the next several days.
5:30
SPEAKER_00: So that's that's not helping your bean crop down here at all.
5:34
SPEAKER_00: Matter of fact, that is just gonna speed up um maturity of that bean crop.
5:40
SPEAKER_00: So, anyway, that's it for today.
5:42
SPEAKER_00: Thanks for listening.
5:43
SPEAKER_00: We'll be back tomorrow.