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Transcript

Daily Market Podcast May 20 · 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 Wednesday, May 20th.
0:06
SPEAKER_00: Walking in this morning, we have July corn down three and a quarter at 472.
0:10
SPEAKER_00: We have July soybeans down two and three quarters at 12.06 and three quarters.
0:15
SPEAKER_00: June crude is down$1.80 at$102.30.
0:19
SPEAKER_00: In corn news this morning, uh, if we look at look back at USDA's planting attentions report uh from the end of March, Kansas is the fifth largest state for corn plantings at 7.1 million acres this year.
0:34
SPEAKER_00: And as of Monday, 63% of the corn was planted, which is a solid week behind normal.
0:41
SPEAKER_00: This is due mainly to dryness.
0:44
SPEAKER_00: But for crop insurance purposes, the final corn planting date is May 25th.
0:49
SPEAKER_00: You've got a few western counties this a little bit later.
0:53
SPEAKER_00: Meaning that after May 25th, farmers can file for prevent plant.
1:00
SPEAKER_00: This year, with farmer PL being not so good and high price fertilizer, high price fuel.
1:06
SPEAKER_00: Does this encourage farmers to take the prevent plant uh payment and we lose corn acres?
1:13
SPEAKER_00: We don't know for sure, but I think it's a risk.
1:16
SPEAKER_00: Also, please see uh I've got some charts on the bottom of this page.
1:22
SPEAKER_00: Please take a look at those.
1:23
SPEAKER_00: These are uh corn crop condition ratings in the mid-south and southeast.
1:29
SPEAKER_00: They're in bad shape.
1:30
SPEAKER_00: Uh rains last night, it rains through most of next week.
1:34
SPEAKER_00: Should improve that, but today, this is not a good start.
1:38
SPEAKER_00: Most states have the worst crop ratings that we've seen in many years.
1:42
SPEAKER_00: On the China news, the market is still waiting for some type of confirmation.
1:47
SPEAKER_00: We're waiting to see if and when China actually buys U.S.
1:50
SPEAKER_00: corn or U.S.
1:51
SPEAKER_00: sorghum.
1:53
SPEAKER_00: Meanwhile, crop condition ratings and crop condition estimates in Brazil continue to get smaller and smaller due to dryness during grain filling.
2:01
SPEAKER_00: And I've got some maps on page two relating to Chinese to uh uh Brazilian rainfall.
2:07
SPEAKER_00: As for CBOT corn, I still see being well supported on breaks and trading mostly steady to higher in the near term.
2:17
SPEAKER_00: As for soybean news, monthly U.S.
2:19
SPEAKER_00: egg production came out yesterday showing April production was up 5%, and the latest broiler placements in the United States is up 3%.
2:28
SPEAKER_00: So this is all more meal demand.
2:32
SPEAKER_00: Also, the latest lysine prices that we can find has lysine up around 30% from where it was trading in late February.
2:40
SPEAKER_00: Urea is needed to produce lysine.
2:42
SPEAKER_00: So as lysine is removed from rations, this is encouraging even more soybean meal use.
2:48
SPEAKER_00: It looks like U.S.
2:50
SPEAKER_00: domestic soybean meal use in the March-April time period was up around 8% from last year.
2:58
SPEAKER_00: So not only do we have big soybean export demand, we also have big domestic use also.
3:05
SPEAKER_00: Meanwhile, as for this Chinese deal, yesterday afternoon, U.S.
3:09
SPEAKER_00: Treasury, Treasury Secretary uh Bessent stated this.
3:14
SPEAKER_00: He said, the U.S.
3:16
SPEAKER_00: is, and I quote, not in a hurry to extend the trade truce that expires in November with China.
3:25
SPEAKER_00: What does this mean?
3:26
SPEAKER_00: Does this affect the 25 million ton deal, swimming deal that China agreed to in October?
3:32
SPEAKER_00: Does this affect the$17 billion ag deal agreed to last week?
3:37
SPEAKER_00: We have no idea.
3:38
SPEAKER_00: There is simply way too much political influence in our markets right now.
3:42
SPEAKER_00: A key data point that the market will be watching to see if China removes this 10% import tariff on U.S.
3:50
SPEAKER_00: soybeans.
3:52
SPEAKER_00: That would be a big deal.
3:53
SPEAKER_00: That would allow private crushers in China to buy U.S.
3:57
SPEAKER_00: soybeans, and it would clearly be a signal that China is back.
4:02
SPEAKER_00: Meanwhile, uh with this potential for a Chinese uh deal being so important uh to the soybean market in the U.S., I just don't see uh soybeans backing off too much.
4:14
SPEAKER_00: I think they'll be very well supported for a while, and any positive confirmation that we can get on that front and CBOT soybeans should rally very quickly.
4:23
SPEAKER_00: The charts at the bottom of page two uh all relate to corn condition ratings in the mid-south and southeast.
4:30
SPEAKER_00: Well worth taking a look.
4:31
SPEAKER_00: They're not so good.
4:33
SPEAKER_00: Um, rainfall.
4:34
SPEAKER_00: The next five days, uh and kind of continue the same pattern that we've had for uh most of this week.
4:40
SPEAKER_00: The next five days looks like Texas across to uh the really the whole south, all the way across to Georgia and up to Kentucky and Tennessee, is gonna be dripping wet.
4:52
SPEAKER_00: And then you somewhat continue the same pattern next week, even though you back off a rainfall uh amount some.
4:58
SPEAKER_00: And then I've got a map of Brazil.
5:01
SPEAKER_00: The biggest part of their corn growing area, Mato Grosso, Mato Grosso do Sul, and Goyas, uh, which represents about 75% of their uh second corn crop, is literally bone dry, not getting a drop of rain for the next 10 days.
5:18
SPEAKER_00: This is again right in the middle of their grain field.
5:21
SPEAKER_00: This is horrible for their corn crop.
5:24
SPEAKER_00: The end result is uh Brazil exports less corn and corn exports from the U.S.
5:29
SPEAKER_00: stay bigger for a longer time period.
5:31
SPEAKER_00: That's it for today.
5:32
SPEAKER_00: Thanks for listening.
5:33
SPEAKER_00: We'll be back tomorrow.