Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Jul 21

Transcript

Daily Market Podcast Jul 21 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management on Tuesday morning, July 21st.
• 0:06
  SPEAKER_00: First off, I want to apologize for not being able to send out a morning report yesterday.
• 0:11
  SPEAKER_00: I hope everybody got the email on Sunday night.
• 0:14
  SPEAKER_00: I was on the road traveling, uh driving for 10 plus hours yesterday, so that really was kind of an impossibility.
• 0:21
  SPEAKER_00: So walking in this morning, we have uh December corn down one and a half at 471.5.
• 0:28
  SPEAKER_00: November beans are down a quarter at 1226.
• 0:31
  SPEAKER_00: September crude is up$1.50 at 84 even.
• 0:36
  SPEAKER_00: Before we get started on corn and beans, we've got several or multiple ongoing war issues that are impacting our markets.
• 0:42
  SPEAKER_00: First thing, last night, uh Ukraine launched some 400-plus drones at Moscow.
• 0:48
  SPEAKER_00: Russia continues to hit grain export facilities in Ukraine.
• 0:53
  SPEAKER_00: At least one-third of Ukraine's grain export capacity is damaged as of today.
• 0:59
  SPEAKER_00: This affects uh wheat and corn export flows uh combined between Russia and Ukraine.
• 1:06
  SPEAKER_00: Also, um, the U.S.
• 1:08
  SPEAKER_00: continues to launch strikes on Iran.
• 1:11
  SPEAKER_00: Iran continues to attack U.S.
• 1:13
  SPEAKER_00: Allied uh targets in the area.
• 1:16
  SPEAKER_00: And uh also the Houthis have raised their involvement and they announced a blockade on Saudi Arabian vessels going through the Red Sea.
• 1:25
  SPEAKER_00: All of this is supportive to crude oil prices and thus corn and soybean oil from a biofuel standpoint.
• 1:33
  SPEAKER_00: As far as corn news this morning, we have a lot of items supporting CBOT corn futures right now.
• 1:40
  SPEAKER_00: We have crude oil that is firm, we have the EU corn crop that is burning up, we have Russia and Ukraine fighting that's limiting grain exports, and we have a warm dry forecast for the U.S.
• 1:51
  SPEAKER_00: corn belt.
• 1:52
  SPEAKER_00: However, as of today, USDA's crop condition ratings remain above average.
• 1:59
  SPEAKER_00: And the size of the U.S.
• 2:00
  SPEAKER_00: corn crop uh is by far the most important variable to the corn market right now.
• 2:07
  SPEAKER_00: I've got a chart on the bottom of page one.
• 2:10
  SPEAKER_00: Uh you can see that the percentage of the U.S.
• 2:14
  SPEAKER_00: corn crop rated good to excellent remains above average.
• 2:18
  SPEAKER_00: Therefore, today condition ratings point to a better than average corn crop.
• 2:24
  SPEAKER_00: Yes, we have a long way to go with this crop, but as of today, it's doing okay.
• 2:29
  SPEAKER_00: This morning we are nearly 50 cents off our lows from late June, and the market has already priced in a lot of these factors we've discussed here.
• 2:37
  SPEAKER_00: So, right here, right now, for this rally to continue, we really need to really threaten the U.S.
• 2:44
  SPEAKER_00: corn crop.
• 2:45
  SPEAKER_00: The forecast this morning continues to show below normal precip and warm temps for the corn belt, but the super hot temperatures remain isolated to the plain states.
• 2:57
  SPEAKER_00: And with the corn crop being 59% silking, we are now entering the highest water use phase of the corn crop's development.
• 3:07
  SPEAKER_00: So, yes, this forecast should threaten the corn crop.
• 3:12
  SPEAKER_00: Um, and that should keep CBOT corn well supported.
• 3:17
  SPEAKER_00: But we may need to get further down the road and see if condition ratings in the coming weeks actually decline more or not.
• 3:26
  SPEAKER_00: Uh, I remain longer-term bullish, CBOT corn, but right here, right now, we may have rallied about all we can.
• 3:32
  SPEAKER_00: The market may need to see more actual damage to the corn crop for us to rally much more, at least right now.
• 3:41
  SPEAKER_00: Moving on to soybeans, CBOT soybean market is a totally different animal altogether.
• 3:47
  SPEAKER_00: We've got China continue to buy U.S.
• 3:49
  SPEAKER_00: beans, even though the U.S.
• 3:53
  SPEAKER_00: soybean prices have rallied and now we are more expensive than Brazil for September, October, November.
• 3:59
  SPEAKER_00: Um, U.S.
• 4:00
  SPEAKER_00: crushers are having to raise their bids to compete with a uh decent export program.
• 4:06
  SPEAKER_00: And thus meal prices have firmed also because crushers are having to pay up for beans.
• 4:13
  SPEAKER_00: Crude oil is also supportive to high soybean oil prices.
• 4:17
  SPEAKER_00: So the soybean market is more focused on demand than it is supply.
• 4:23
  SPEAKER_00: Very different scenario than what the corn market's wanting to focus on right now.
• 4:27
  SPEAKER_00: As for the USDA crop condition ratings, soybeans uh rated good to excellent actually went up yesterday.
• 4:35
  SPEAKER_00: Uh, you can see a chart on the bottom of uh of page one.
• 4:39
  SPEAKER_00: Uh condition ratings are really pretty decent today, and this implies a very good U.S.
• 4:45
  SPEAKER_00: bean crop today.
• 4:46
  SPEAKER_00: At some point, this bean rally should be sold.
• 4:51
  SPEAKER_00: We're clearly just not there yet.
• 4:54
  SPEAKER_00: Moving on to weather, uh, you can see the 1 to 5 and 6 to 10 day uh have very limited moisture for the corn belt, uh, particularly the plain states, but really the entire cornbelt.
• 5:06
  SPEAKER_00: And then I've got the high temperature forecast for Saturday and Sunday, and we've got hundreds to 105s and even some 110 plus temperatures uh in the plain states.
• 5:21
  SPEAKER_00: So crops continue to go down in the plain states, and this weather is a little bit threatening in the Corn Belt.
• 5:29
  SPEAKER_00: That's it for today.
• 5:30
  SPEAKER_00: Thanks for listening.
• 5:31
  SPEAKER_00: We'll be back tomorrow.