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Daily Market Podcast Jun 17 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management on Wednesday morning, June 17th, with our daily market letter.
• 0:07
  SPEAKER_00: Walking in this morning, December Corn is up 5.5 at 448.
• 0:11
  SPEAKER_00: November beans are up 8 at 11.54 and a half.
• 0:14
  SPEAKER_00: August crude is up 70 cents at 76 even.
• 0:21
  SPEAKER_00: As far as corn news this morning, um, in a minute I'll be talking about maybe China buying U.S.
• 0:27
  SPEAKER_00: beans.
• 0:28
  SPEAKER_00: So the thought for corn becomes if China is close to buying U.S.
• 0:31
  SPEAKER_00: beans, when do they buy U.S.
• 0:33
  SPEAKER_00: corn?
• 0:34
  SPEAKER_00: We've discussed in recent days that speculators have gotten out of their entire loan of corn and they're now actually short CBOT corn.
• 0:42
  SPEAKER_00: So it seems easy to argue this morning that we have likely put in our lows for a while.
• 0:47
  SPEAKER_00: The rest of the news is little changed.
• 0:49
  SPEAKER_00: Uh dryness is still hurting uh EU corn crops.
• 0:52
  SPEAKER_00: I've got maps uh with uh precip uh on page two.
• 0:58
  SPEAKER_00: U.S.
• 0:58
  SPEAKER_00: exports repace remains super strong, but at the same time, U.S.
• 1:04
  SPEAKER_00: crops are doing good, mostly.
• 1:06
  SPEAKER_00: Uh the University of Illinois did put out a research piece uh in the last couple of days on Illinois soils being too wet and potentially leaching nitrogen.
• 1:16
  SPEAKER_00: But net net, U.S.
• 1:17
  SPEAKER_00: crops are still in great shape.
• 1:19
  SPEAKER_00: So again, we're in a situation where we need one of two things to give us some kind of sustained rally.
• 1:25
  SPEAKER_00: Either one, China buys U.S.
• 1:27
  SPEAKER_00: corn, or two, we need some major crop issue in the U.S.
• 1:31
  SPEAKER_00: And today we don't have either one.
• 1:33
  SPEAKER_00: But the market is guessing that China uh may be in for U.S.
• 1:38
  SPEAKER_00: grains.
• 1:39
  SPEAKER_00: So longer term, I still remain uh bullish CBOT corn.
• 1:44
  SPEAKER_00: I see breaks as opportunities to buy.
• 1:47
  SPEAKER_00: Now on to soybeans.
• 1:49
  SPEAKER_00: CBOT soybeans rallied pretty decent yesterday and then again overnight on talk that China was in checking U.S.
• 1:56
  SPEAKER_00: Gulf soybean prices.
• 1:58
  SPEAKER_00: There has been no trade yet that we can confirm, but the market took this as a sign that China is coming.
• 2:06
  SPEAKER_00: Also, in recent days, and this affects um the U.S.
• 2:11
  SPEAKER_00: market quite a bit here, uh soybean basis in Brazil has rallied quite a bit.
• 2:19
  SPEAKER_00: The reason being soybean harvest is over there.
• 2:22
  SPEAKER_00: Prices, flat price has broken to the farmer, and farmer sales have slowed down.
• 2:26
  SPEAKER_00: The crush industry is running wide open.
• 2:29
  SPEAKER_00: They're running at a record pace so far this season.
• 2:31
  SPEAKER_00: Crush demand is big, and that combination of slower farmer selling and big crush demand means that their export bids have firmed up quite a bit to keep beans moving to the ports.
• 2:45
  SPEAKER_00: With a break in CBOT soybean futures, all of a sudden we walk in and we that has put U.S.
• 2:52
  SPEAKER_00: soybean prices uh at the Gulf in a much more competitive spot, especially September forward.
• 2:58
  SPEAKER_00: I've got a chart on the bottom of page one showing these uh export prices uh between US uh Gulf and Brazil.
• 3:08
  SPEAKER_00: So on a landed basis, um all of a sudden September forward, U.S.
• 3:14
  SPEAKER_00: beans are competitive going to Asian markets.
• 3:19
  SPEAKER_00: So what does this mean?
• 3:22
  SPEAKER_00: Well, previously we had talked about the big supply of soybeans in Brazil, and that meant that if China does show up, the rest of the world just goes down to Brazil.
• 3:34
  SPEAKER_00: Well, now we may be in a situation where we start getting back in the export business again.
• 3:39
  SPEAKER_00: Our exports have been stinko lately.
• 3:41
  SPEAKER_00: We may be fixing to start doing some export business.
• 3:44
  SPEAKER_00: So if China, if and when China does come to buy U.S.
• 3:47
  SPEAKER_00: beans, we could have a pretty decent export program.
• 3:51
  SPEAKER_00: And that in turn would tighten up any stocks.
• 3:55
  SPEAKER_00: But you still need a catalyst, uh, like corn.
• 3:58
  SPEAKER_00: So China has yet to buy any U.S.
• 4:01
  SPEAKER_00: beans.
• 4:02
  SPEAKER_00: Uh, it's just talk so far, and the U.S.
• 4:04
  SPEAKER_00: crop is still in great shape.
• 4:06
  SPEAKER_00: So uh we need that spark, and if China does come by U.S.
• 4:11
  SPEAKER_00: beans, that could be that spark.
• 4:14
  SPEAKER_00: Now moving on to weather, we continue to see uh decent pre-sip across the center of the country and the mid-south.
• 4:21
  SPEAKER_00: Um, and that's in the 1 to 5, 6 to 10, 8 to 14, you know, pretty much whatever time period you want to look at going forward.
• 4:29
  SPEAKER_00: There's still no prolonged dryness with the exception of the southwest plains that we've got to look at.
• 4:37
  SPEAKER_00: Um, Europe, as I stated earlier, Europe remains hot and dry.
• 4:42
  SPEAKER_00: Um, and as far as heat goes, there's quite a few days of 95 to 100 plus degree temperatures across Spain and France.
• 4:51
  SPEAKER_00: Uh, and this is just not good news for their corn crop at all.
• 4:55
  SPEAKER_00: So that's it for today.
• 4:57
  SPEAKER_00: Thanks for listening.
• 4:58
  SPEAKER_00: We'll be back tomorrow.