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Transcript

Daily Market Podcast Aug 25 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with N6 Capital Management with our daily market letter on Tuesday morning, August 25th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is unchanged at 5.15 and a half.
• 0:11
  SPEAKER_00: November soybeans are down five at 12.19 and three quarters.
• 0:15
  SPEAKER_00: December meal is down 90 cents at 327.80.
• 0:21
  SPEAKER_00: And October crude is down$3.82 even.
• 0:25
  SPEAKER_00: We need to cover U.S.
• 0:27
  SPEAKER_00: Iran this morning.
• 0:29
  SPEAKER_00: Um, yesterday Treasury Secretary Bessant uh provided more information on this uh economic D-Day, so they're calling it for Iran.
• 0:39
  SPEAKER_00: Basically, the U.S.
• 0:40
  SPEAKER_00: is moving to cut off Iran from all trade, stop all imported goods, close all international banking systems to Iranian banks, stop all oil exports, etc., etc.
• 0:52
  SPEAKER_00: And Trump's administration claimed that there will be harsh consequences for any person, company, or nation that violates this economic ban.
• 1:03
  SPEAKER_00: The biggest question mark for us is China.
• 1:06
  SPEAKER_00: China buys the bulk of Iranian's oil exports.
• 1:10
  SPEAKER_00: China will not simply roll over and agree to this.
• 1:15
  SPEAKER_00: Um, at a minimum, this makes our ag markets question China continuing to buy U.S.
• 1:21
  SPEAKER_00: soybeans.
• 1:24
  SPEAKER_00: Moving on to core news.
• 1:26
  SPEAKER_00: Um if we step back for a second, back when I was running my investment fund, the biggest thing every day was to see what new data or new information the market received and how did the market react to that?
• 1:43
  SPEAKER_00: Did the market behave logically or not?
• 1:46
  SPEAKER_00: That was a very telling piece of the puzzle.
• 1:50
  SPEAKER_00: Well, in the last two weeks, the information flow has been this the U.S.
• 1:54
  SPEAKER_00: corn export demand is massive, and the U.S.
• 1:57
  SPEAKER_00: crop has been damaged and is getting smaller.
• 2:00
  SPEAKER_00: And then last week we got confirmation of a smaller crop with daily observations from this ProFarmer Crop Tour.
• 2:08
  SPEAKER_00: And then Friday, we got a very small 173 bushel per acre yield from the tour.
• 2:14
  SPEAKER_00: And CBOT corn uh raced higher to new contract highs yesterday, and then it backed off.
• 2:22
  SPEAKER_00: Yesterday afternoon, USDA lowered its weekly corn crop condition rating three points from 60% rated good to excellent to 57.
• 2:32
  SPEAKER_00: That is the fifth lowest crop rating for this time of year in 25 years.
• 2:39
  SPEAKER_00: And CBOT corn is unchanged this morning.
• 2:43
  SPEAKER_00: My point is this we have fed this market a lot of bullish news and it rallied.
• 2:49
  SPEAKER_00: And we fed in more bullish news and it stopped rallying.
• 2:54
  SPEAKER_00: The market trades like it has already priced in all the bullish news for right now.
• 2:59
  SPEAKER_00: Also, let's look at this from a statistical standpoint.
• 3:03
  SPEAKER_00: The rally from the lows on August 11th to the high yesterday was the biggest August rally that we have had in over 20 years, both in terms of cents per bushel and a percentage.
• 3:16
  SPEAKER_00: And the December Corn contract made a new contract high yesterday.
• 3:22
  SPEAKER_00: A new contract high in August has not happened anytime in the last 20 years.
• 3:29
  SPEAKER_00: Let's not forget that we still have to harvest to go through and plenty of pharma selling ahead of us.
• 3:35
  SPEAKER_00: So for all these reasons, it does seem like the corn market has rallied about all it can for right now.
• 3:43
  SPEAKER_00: I still remain longer-term bullish corn.
• 3:45
  SPEAKER_00: Matter of fact, very bullish for next spring and summer, but we still have to harvest a corn crop and there will be no shortage of grain this fall.
• 3:54
  SPEAKER_00: I don't see CBOT corn selling off very much right now, but for the next month or so, it may struggle to rally much more from where it is.
• 4:04
  SPEAKER_00: Moving on to soybeans, the soybean market is just simply awash with conflicting signals this morning.
• 4:11
  SPEAKER_00: ProFarmers daily pod counts last week pointed to a smaller U.S.
• 4:16
  SPEAKER_00: crop, but the their yield estimate on Friday did not.
• 4:21
  SPEAKER_00: Uh, will this new economic pressure on Iranian training partners make China back off from buying U.S.
• 4:28
  SPEAKER_00: beans?
• 4:29
  SPEAKER_00: Uh, as for beanal, there's talk that EPA will grant more waivers, meaning that biofuel demand is getting smaller.
• 4:37
  SPEAKER_00: Also, crude oil has broken 8% in two days.
• 4:41
  SPEAKER_00: That impacts bean oil prices.
• 4:43
  SPEAKER_00: So, a lot of moving parts in soybeans.
• 4:47
  SPEAKER_00: As I stated yesterday, the soybean market may have done about all it can to the upside for now.
• 4:53
  SPEAKER_00: I'm not getting bearish.
• 4:55
  SPEAKER_00: I just don't think we can rally much further from where it is.
• 4:58
  SPEAKER_00: Not right now.
• 5:00
  SPEAKER_00: Um, at the bottom of page one, I've got a chart of EU corn production and expected imports.
• 5:07
  SPEAKER_00: And as you can see, it looks like the EU is gonna produce the smallest corn crop in many, many years, and therefore that translates into uh record large corn imports at some point down the road.
• 5:22
  SPEAKER_00: Moving on to weather, looks like we're gonna have light scattered showers uh in the corn belt for the next you know week, week and a half, some heavy rains uh in the mid-south and southeast, but that's gonna be it.
• 5:37
  SPEAKER_00: Uh we have a situation where topsoil moisture, particularly in the northern parts of the north and northwestern parts of the corn belt, is starting to dry out again.
• 5:46
  SPEAKER_00: They need better rains, and the next week, week and a half, we're just gonna get light scattered stuff.
• 5:52
  SPEAKER_00: They they need more rain than what they're getting.
• 5:54
  SPEAKER_00: Um, and this would primarily be North Dakota, South Dakota, uh parts of Iowa, Minnesota, uh, and Michigan also.
• 6:03
  SPEAKER_00: And it looks like these warm temperatures uh for the pretty much all the grain growing areas uh of the United States are going to be above normal to much above normal for the foreseeable future.
• 6:17
  SPEAKER_00: So that's not going to help out the soil moisture levels in those northern areas.
• 6:21
  SPEAKER_00: That's it for today.
• 6:22
  SPEAKER_00: Thanks for listening.
• 6:23
  SPEAKER_00: We'll be back tomorrow.