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Transcript

Daily Market Podcast Aug 10 · 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 Monday morning, August 10th.
• 0:07
  SPEAKER_00: I'm back in the office this morning.
• 0:08
  SPEAKER_00: Again, I apologize for being gone on Friday.
• 0:11
  SPEAKER_00: Part of my trip on Friday is I was on a hiking trip in South Central Wyoming, and I've included in today's email a sunset from Friday night at 11,000 feet.
• 0:25
  SPEAKER_00: It's a beautiful part of the world.
• 0:28
  SPEAKER_00: Anyway, on the markets this morning, walking in this morning, we've got December corn up one and three quarters at 463 and three quarters.
• 0:35
  SPEAKER_00: We've got November soybeans up five and a half at 1181 and three quarters.
• 0:39
  SPEAKER_00: December meal is up$1.50 at$4.94.
• 0:42
  SPEAKER_00: Sorry, at$314.90.
• 0:44
  SPEAKER_00: September crude is up$1.30 at$79.50.
• 0:49
  SPEAKER_00: As far as corn news over the weekend, Russia continues to up their attacks on Ukraine, grain export facilities in the Black Sea.
• 0:59
  SPEAKER_00: They've done so much damage to the port structure there and the infrastructure going in there.
• 1:04
  SPEAKER_00: We're at a point now where even if the conflict stopped today, it would be months before grain would return to normal export flows.
• 1:14
  SPEAKER_00: So this removes a decent amount of wheat and corn from the world market.
• 1:19
  SPEAKER_00: Some amount of grain is able to flow overland from Ukraine, but not nearly enough to compensate for the lost Black Sea ports.
• 1:26
  SPEAKER_00: Also this morning, uh Strait of Hormuz, it appears, is continue to be closed.
• 1:32
  SPEAKER_00: The Houthis have also attacked an old refinery in Saudi Arabia, so crude oil is firmed up.
• 1:37
  SPEAKER_00: These two issues are supporting CBOT grain markets this morning.
• 1:41
  SPEAKER_00: But in the bigger picture for corn, the corn market is simply buying time to get to the USDA crop report on Wednesday.
• 1:49
  SPEAKER_00: USDA will change its U.S.
• 1:51
  SPEAKER_00: corn yield estimate.
• 1:52
  SPEAKER_00: And we're in the camp that the yield will be slightly lower than their latest 183 bushel an acre estimate.
• 1:58
  SPEAKER_00: And they may or may not change planted and harvested acres.
• 2:02
  SPEAKER_00: So lots of moving parts in corn.
• 2:05
  SPEAKER_00: This is a major report, this USDA report on Wednesday, and it can reset the direction of the corn market.
• 2:12
  SPEAKER_00: This morning, we've also included a seasonal chart of December corn futures.
• 2:18
  SPEAKER_00: And as you can see, seasonally the uh CBT CBFT corn futures bottom out in the second to third week of August.
• 2:26
  SPEAKER_00: So basically, right now.
• 2:28
  SPEAKER_00: Hopefully, we're a lot smarter after Wednesday's USDA report.
• 2:33
  SPEAKER_00: It can and very likely will be a very volatile report for the market.
• 2:37
  SPEAKER_00: I remain longer-term bullish corn as long as USDA does not give us some shocker on Wednesday.
• 2:45
  SPEAKER_00: Move on to soybeans.
• 2:46
  SPEAKER_00: Walking in this morning, this morning, USDA Gulf soybeans for September are 60 cents a bushel cheaper than Brazil.
• 2:55
  SPEAKER_00: And in October, they're 50 cents a bushel cheaper.
• 2:58
  SPEAKER_00: So we continue to see more and more U.S.
• 3:00
  SPEAKER_00: soybean export business.
• 3:03
  SPEAKER_00: So we remain in the scenario of a record U.S.
• 3:06
  SPEAKER_00: soybean demand, which is record crushing decent exports.
• 3:11
  SPEAKER_00: Um therefore the USDA crop report on Wednesday means a lot.
• 3:16
  SPEAKER_00: Will they continue to forecast a record U.S.
• 3:19
  SPEAKER_00: soybean crop?
• 3:21
  SPEAKER_00: I think the answer is yes.
• 3:22
  SPEAKER_00: I believe USDA will issue a U.S.
• 3:25
  SPEAKER_00: soybean yield that is steady to slightly higher than their current 53 bushel per acre yield.
• 3:32
  SPEAKER_00: And they may even add more soybean planted acres.
• 3:36
  SPEAKER_00: So that would give us a record crop and record demand.
• 3:40
  SPEAKER_00: What does that mean for price direction?
• 3:42
  SPEAKER_00: Well, I contend that it's going to be hard to break CBOT soybean futures when we have massive U.S.
• 3:49
  SPEAKER_00: crush margins.
• 3:50
  SPEAKER_00: Demand's just too big.
• 3:52
  SPEAKER_00: And as you can see below at the bottom of page one, uh seasonally CBOT soybeans make a low in early to mid-August.
• 4:01
  SPEAKER_00: So unless we have some shocker from USD on Wednesday, I still believe that CBOT soybeans remain well supported.
• 4:08
  SPEAKER_00: We still have a lot more of the growing season left, and I personally feel like we need to get further down the road and see what this crop looks like a month from now.
• 4:17
  SPEAKER_00: And also see how export demand shape up.
• 4:20
  SPEAKER_00: So for now, CBOT soybeans remain well supported.
• 4:25
  SPEAKER_00: Moving on to weather, um we've got a decent system coming across parts of Illinois and in further into the eastern corn belt over the next several days.
• 4:34
  SPEAKER_00: When we move uh later in the week and over into the weekend, rains uh severely back away, and we don't really have the six to ten time period, six to ten day time period, we really don't have very much moisture in the cornbelt.
• 4:46
  SPEAKER_00: And we have still got these just smoking hot temperatures uh in the plain states.
• 4:51
  SPEAKER_00: We got several days in a row, uh well over uh 100 degrees, covering Oklahoma, Kansas, well up into South uh to Nebraska, uh, and even uh into parts of South Dakota later in the week.
• 5:05
  SPEAKER_00: So uh so those crops in the plain states just continue to get uh torched.
• 5:11
  SPEAKER_00: And also I've got a chart on the bottom of page two of the Mississippi River at Cruthersville.
• 5:16
  SPEAKER_00: Uh the forecast um this morning is for it to continue to drop several more feet.
• 5:23
  SPEAKER_00: We really need to be watching this.
• 5:25
  SPEAKER_00: Uh if it continues to drop much further, uh it it could, uh I'm not sure it's saying it will, but it could affect the flow of U.S.
• 5:34
  SPEAKER_00: exports, which is going to be a big deal.
• 5:36
  SPEAKER_00: So we need to keep an eye on this.
• 5:38
  SPEAKER_00: That's it for today.
• 5:39
  SPEAKER_00: Thanks for listening.
• 5:40
  SPEAKER_00: We'll be back tomorrow.