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Transcript

Daily Market Podcast May 5 · 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 Tuesday, May 5th.
• 0:06
  SPEAKER_00: Walking in this morning, we've got July corn down two cents at 443 and three quarters.
• 0:11
  SPEAKER_00: We've got July soybeans down four and a quarter at 12.03 and a quarter.
• 0:16
  SPEAKER_00: And we've got June crude down 240 at 104 even.
• 0:20
  SPEAKER_00: As for corn news today, it does seem like each day that we walk in, there's some new bullish factor in grains.
• 0:27
  SPEAKER_00: As long and along with each of these new data points, we continue to get speculator money inflows.
• 0:34
  SPEAKER_00: We are told that there was quite a bit of farmer selling around the$5 area in December futures, but speculator buying ate right through that and kept on going.
• 0:44
  SPEAKER_00: So on to those data points, as far as yesterday, we got new acreage estimates out of Romania showing even smaller corn plantings than what was early expected, mainly due to high fertilizer cost.
• 0:58
  SPEAKER_00: And we're getting more estimates out of Argentina on smaller and smaller wheat plantings for the same reason.
• 1:05
  SPEAKER_00: In USDA's weekly crop progress report, they did show the U.S.
• 1:08
  SPEAKER_00: corn planting was 38% complete, several days ahead of the normal 34% for the state, but their topsoil moisture ratings were quite alarming.
• 1:19
  SPEAKER_00: Much of the plain states and across the southeast are rated dry.
• 1:23
  SPEAKER_00: For example, the combined percentage of land rated as short to very short topsoil moisture is rated as 56% of the land in Oklahoma, 60% in Kansas, and 72% in Nebraska.
• 1:39
  SPEAKER_00: Meanwhile, there continue to be more and more market talk that U.S.
• 1:43
  SPEAKER_00: corn plantings are going to be even smaller than what USDA gave us in their March forecast due to high input cost.
• 1:51
  SPEAKER_00: We won't get a new estimate from USDA until late June.
• 1:55
  SPEAKER_00: Moving south, Brazil is still hot and dry.
• 1:59
  SPEAKER_00: Temperatures across central Brazil are forecast to be five to ten degrees Fahrenheit above normal for the next week.
• 2:06
  SPEAKER_00: Net net, the story continues to be the same.
• 2:09
  SPEAKER_00: We are losing grain production globally, and these large investment funds are buying more and more CBOT corn.
• 2:17
  SPEAKER_00: Until we get much further down the calendar and see how these northern hemispheres crops are doing, CBOT corn should be well supported.
• 2:24
  SPEAKER_00: The path of least resistance for corn seems to be stated higher for now.
• 2:29
  SPEAKER_00: Moving on to soybeans, CBOT took off yesterday on what we can best phrase as hopium, that this upcoming schedule meeting between Chinese President Z and Trump will result in China buying more U.S.
• 2:44
  SPEAKER_00: soybeans.
• 2:45
  SPEAKER_00: But let's not overlook the fact that the U.S.
• 2:48
  SPEAKER_00: military blockade on Iranian ports has cut off around 10 to 12% of China's crude oil imports.
• 2:55
  SPEAKER_00: And that is on top of us already cutting off their uh imports of crude oil from Venezuela.
• 3:02
  SPEAKER_00: That is not nothing.
• 3:04
  SPEAKER_00: As far as this mess for Iran, it does seem, it does not seem that this is going to end anytime soon.
• 3:10
  SPEAKER_00: Therefore, crude oil remains high, and that supports bean oil prices.
• 3:14
  SPEAKER_00: As for meal, we are beginning to see meal exports pick up out of Argentina.
• 3:19
  SPEAKER_00: Some meal is being offered from Argentina for a negative five to negative seven basis, while the U.S.
• 3:29
  SPEAKER_00: Gulf is being offered around a$20 positive basis.
• 3:34
  SPEAKER_00: So we may see some U.S.
• 3:36
  SPEAKER_00: meal export business to Asia decline.
• 3:39
  SPEAKER_00: But let's not forget the fact that we still have maintenance downtime coming this month and next month in the U.S.
• 3:46
  SPEAKER_00: that crushers will use to keep U.S.
• 3:48
  SPEAKER_00: meal supplies tight.
• 3:50
  SPEAKER_00: So U.S.
• 3:51
  SPEAKER_00: demands for soybean products remains strong.
• 3:54
  SPEAKER_00: But on the backside of all this, we need to remember that around the world, when we are losing wheat area and corn and barley area, we are also gaining sunflower and canola and soybeans.
• 4:09
  SPEAKER_00: That will come to haunt us some point down the road.
• 4:13
  SPEAKER_00: For now, CBO2 soybeans continue to be well supported.
• 4:18
  SPEAKER_00: The charts I've got in there today is show U.S.
• 4:20
  SPEAKER_00: corn planting and U.S.
• 4:22
  SPEAKER_00: soybean planting pace.
• 4:24
  SPEAKER_00: We've all seen those before.
• 4:26
  SPEAKER_00: As far as weather going forward the next four or five days, the mid-south, uh, Arkansas, Louisiana, Mississippi, all the way across to South Carolina remains quite wet.
• 4:38
  SPEAKER_00: Um, and to a lesser degree, the same area in the six to ten day.
• 4:42
  SPEAKER_00: The rest of the country is relatively dry.
• 4:45
  SPEAKER_00: We do have some pretty cool temperatures uh coming for tonight into tomorrow morning across the northern corn belt, uh, South Dakota, North Dakota, Minnesota, Wisconsin, well up into Canada are going to be down in the 30s.
• 4:59
  SPEAKER_00: This is going to keep soil uh temperatures pretty cold and therefore slow planning going forward uh in those areas.
• 5:06
  SPEAKER_00: And then also I've got a 10 day forecast for Brazil, and the biggest corn producing state that we've all talked about is Mato Grosso.
• 5:14
  SPEAKER_00: They're right in the middle of green uh field for corn, and they're bone dry for the next 10 days and warm.
• 5:20
  SPEAKER_00: Just not good.
• 5:22
  SPEAKER_00: That's it for today.
• 5:23
  SPEAKER_00: Thanks for listening.
• 5:24
  SPEAKER_00: We'll be back tomorrow.