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Daily Market Podcast Sep 9 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with William Six Capital Management with our daily market letter on Wednesday morning, September 9th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down one cent at 5.32 and a half.
• 0:12
  SPEAKER_00: November soybeans are down one and a quarter at 13.15.
• 0:17
  SPEAKER_00: December meal is up 90 cents at 350.70.
• 0:21
  SPEAKER_00: And October crude is up another$2.50 at$95.50.
• 0:27
  SPEAKER_00: As far as corn news this morning, uh yesterday the corn market got some quite bullish news.
• 0:34
  SPEAKER_00: Russia and Ukraine peace talks have failed over the weekend, and each nation resumed attacks on each other.
• 0:39
  SPEAKER_00: And that means grain exports from the Black Sea will be pretty much non-existent for a while longer.
• 0:46
  SPEAKER_00: And that cuts into a decent chunk of the global, sorry, global wheat surprise, and some amount of corn, which should have been bullish.
• 0:57
  SPEAKER_00: Corn futures rallied Sunday night on that news and then finished down four cents on the day yesterday.
• 1:03
  SPEAKER_00: And then late yesterday, we got a U.S.
• 1:06
  SPEAKER_00: corn yield estimate from Stone X at a huge 182.9 bushels per acre.
• 1:14
  SPEAKER_00: This is a farmer survey that they have been running for many, many years.
• 1:18
  SPEAKER_00: That is a huge corn yield and should have been very bearish.
• 1:24
  SPEAKER_00: The market sold off overnight last night and then is basically unchanged this morning, only down a penny.
• 1:31
  SPEAKER_00: So my point is this the USDA crop production report later this week is so monumentally important that the market is sloughing off all other data that normally would matter.
• 1:43
  SPEAKER_00: USDA will issue that report at 11 a.m.
• 1:47
  SPEAKER_00: Central Time Friday morning, and the range of yield guesses that we have seen so far is about as wide as we have ever seen for a September report.
• 1:58
  SPEAKER_00: Which means there will be a lot more people that will be wrong when the report comes out.
• 2:03
  SPEAKER_00: And that means volatility.
• 2:06
  SPEAKER_00: Also, yesterday afternoon, USDA issued their weekly crop progress report, and it showed U.S.
• 2:12
  SPEAKER_00: corn condition rating declined one point from 57% rated good to excellent to 56%.
• 2:19
  SPEAKER_00: I've got a map, uh, I'm sorry, not a map, I've got a chart of condition ratings on the bottom of page one for people to look at.
• 2:25
  SPEAKER_00: Condition ratings are mostly normal-ish in central areas and well below normal in western states.
• 2:33
  SPEAKER_00: So far, 5% of the U.S.
• 2:35
  SPEAKER_00: corn crop has been harvested, and we are seeing yield reports all over the place in Illinois, Kentucky, Missouri, and Kansas from really bad to okay.
• 2:47
  SPEAKER_00: And quite a few reports uh from all over the areas uh coming in that corn is drying down really, really fast this year.
• 2:56
  SPEAKER_00: So that hits test weight pretty hard.
• 2:59
  SPEAKER_00: Uh matter of fact, we had a couple of reports that had dried down from 20% to 16% in one day, which is pretty uncommon.
• 3:09
  SPEAKER_00: As far as CBOT corn goes, I remain longer-term bullish, uh, but just not today.
• 3:17
  SPEAKER_00: Um, we need to get past this US report USDA report on Friday and then get past harvest time.
• 3:24
  SPEAKER_00: As far as soybean use, like corn, the soybean market is awaiting the USDA report on Friday.
• 3:30
  SPEAKER_00: The yield guesses for soybeans are from unchanged to down slightly from USDA's yield in August.
• 3:38
  SPEAKER_00: USDA's yield condition rating, um sorry, condition rating yesterday for soybeans was unchanged at 58% rate of good to excellent.
• 3:48
  SPEAKER_00: Again, I've got a chart uh on the bottom of page one that you can see that that is rather normal-ish for this time of year.
• 3:55
  SPEAKER_00: Um, condition ratings are normal to above normal in the central cornbelt states and below normal in several western states and also along the east coast.
• 4:06
  SPEAKER_00: And moving south uh to South America here, soybean planting can legally legally begin in Mato Grosso, Brazil this week.
• 4:19
  SPEAKER_00: There are laws to limit how early farmers can plant um in Mato Grosso, and the effort there is to keep land bare of soybeans for a certain period of time in an effort to control soybean rust.
• 4:35
  SPEAKER_00: Uh, but an additional problem down there is central Brazil has been very dry, and we doubt that many farmers will begin planting yet.
• 4:44
  SPEAKER_00: They normally wait for seasonal rains to begin.
• 4:47
  SPEAKER_00: And as of this morning's forecast, we do not see much rain coming from Mato Grosso for at least another two weeks.
• 4:55
  SPEAKER_00: So planting this year may be off to a slow start.
• 4:59
  SPEAKER_00: I would expect CBOT soybeans to mostly trade sideways this week until we get this USG report either way on Friday.
• 5:07
  SPEAKER_00: As far as the weather forecast goes, we've got some decent rains coming across the uh central part of the cornbelt this week, and then central and northern areas of the corn belt get another decent rain next week.
• 5:20
  SPEAKER_00: But the more important forecast is Brazil.
• 5:23
  SPEAKER_00: I've got the 10-day forecast on page two, a 10-day forecast for South America, and central Brazil is bone dry, and central parts of Argentina, um, Santa Fe down into northern and central Buenos Aires, not much moisture there either.
• 5:43
  SPEAKER_00: So both of these are heavy grain areas that could use a rain here pretty quickly.
• 5:49
  SPEAKER_00: So one thing we need to really be paying attention to in South America, this uh corn and soybean market this year will have zero tolerance for any crop areas uh having uh problems in South America.
• 6:06
  SPEAKER_00: We don't need dryness, we don't need it too wet, we don't need flooding, we need perfect.
• 6:11
  SPEAKER_00: As of right now, both Brazil and Argentina have rather large dry areas.
• 6:17
  SPEAKER_00: Yeah, and yes, we're only dealing with planting season right now, but this is something we need to watch.
• 6:24
  SPEAKER_00: One other note for today I will be out of the office this afternoon and the following two days uh traveling for business.
• 6:32
  SPEAKER_00: So if there is anybody that needs to reach me, I will be available on email.
• 6:38
  SPEAKER_00: Um, but phone calls and texts will be rather limited.
• 6:42
  SPEAKER_00: I'll be back on Monday, but we will uh continue to issue our daily reports each day.
• 6:48
  SPEAKER_00: That's it for today.
• 6:49
  SPEAKER_00: Thanks for listening.
• 6:50
  SPEAKER_00: We'll be back tomorrow.