Latest / M6 Capital Daily Market Podcast / Daily Market Podcast May 26

Transcript

Daily Market Podcast May 26 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with AM6 Capital Management with our daily market letter on Tuesday, the 26th of May.
• 0:08
  SPEAKER_00: Walking in this morning, July corn is down four and three quarters at 4.58.5.
• 0:12
  SPEAKER_00: July soybeans are down five and three quarters at$11.90.5.
• 0:16
  SPEAKER_00: And June crude is down$4 at$92.60.
• 0:21
  SPEAKER_00: Let's talk about crude oil for a minute this morning.
• 0:23
  SPEAKER_00: Matter of fact, we're going to focus a lot on crude oil today.
• 0:26
  SPEAKER_00: There are all kinds reports that the U.S.
• 0:27
  SPEAKER_00: and Iran are nearing a peace deal and the Strait of Hormuz is close to reopening.
• 0:32
  SPEAKER_00: As such, crude oil broke$4 last night and grains followed.
• 0:37
  SPEAKER_00: However, as we understand, there are three factors that will keep crude oil from quickly falling back to the low 60s where they were trading in February before the U.S.
• 0:47
  SPEAKER_00: attacked Iran.
• 0:48
  SPEAKER_00: Number one, communication with Iranian leaders is very slow.
• 0:52
  SPEAKER_00: They are reportedly hiding in underground buckers and using a series of couriers for communication instead of using any forms of electronic communication.
• 1:03
  SPEAKER_00: This makes negotiations very slow.
• 1:06
  SPEAKER_00: Number two, the military saying that the Strait of Harmuz is open and shipping and insurance companies actually using the strait are completely different items.
• 1:16
  SPEAKER_00: Shipping and insurance firms may and will move much, much slower.
• 1:22
  SPEAKER_00: Number three, global crude oil inventories have dropped to the lowest levels in many, many years.
• 1:28
  SPEAKER_00: Once the strait is open, whenever that happens, many nations around the world will very likely take this as an opportunity to restock oil levels.
• 1:38
  SPEAKER_00: I've got a chart of this on page two today that's well worth taking a look at.
• 1:43
  SPEAKER_00: I think this will keep crude oil demand very strong.
• 1:47
  SPEAKER_00: So you put all these three together and crude oil breaking back down to the low to mid-60s where it was earlier, I think is going to take a very long time for us to get there.
• 2:07
  SPEAKER_00: However, we did not get any confirmation from China about this$17 billion deal.
• 2:14
  SPEAKER_00: The key data point for confirmation that the market is looking for is China removing import duties on U.S.
• 2:21
  SPEAKER_00: grains.
• 2:22
  SPEAKER_00: We did, however, see over the weekend that leaders from several African nations were meeting in China, and the Chinese government did remove import duties on many items coming from Africa.
• 2:35
  SPEAKER_00: So that again yet again the market is waiting on that.
• 2:41
  SPEAKER_00: So the corn market remains in a wait-and-see mode.
• 2:44
  SPEAKER_00: Meanwhile, there's a second question regarding China as to whether China actually wants to import much corn or not.
• 2:53
  SPEAKER_00: We did see late last week China bought and shipped uh some 230,000 tons of corn from Argentina to China.
• 3:03
  SPEAKER_00: So that answers that question.
• 3:05
  SPEAKER_00: Yes, China is back in the corn buying mode.
• 3:08
  SPEAKER_00: I still believe that breaks in CBOT corn will be very well supported.
• 3:12
  SPEAKER_00: Any verification from China uh that China's going to be buying U.S.
• 3:16
  SPEAKER_00: corn, and that's likely going to be them dropping the import duty.
• 3:20
  SPEAKER_00: Uh andor if we see any crop issues and corn futures uh raise higher.
• 3:27
  SPEAKER_00: Moving on to soybeans.
• 3:29
  SPEAKER_00: Soybean meal demand uh remains super strong.
• 3:32
  SPEAKER_00: Soybean meal prices remain right in the middle of the trading range from last month.
• 3:38
  SPEAKER_00: Um export demand for soybean meal will be the key item to watch.
• 3:43
  SPEAKER_00: Argentina is picking up exports, Brazil is shipping meal at a pretty decent rate, also.
• 3:49
  SPEAKER_00: But so far, global import demand for soybean meal remains super, super strong.
• 3:56
  SPEAKER_00: Now, shifting down to Brazil, the big bean crop in Brazil is keeping their soybean prices much cheaper than U.S.
• 4:02
  SPEAKER_00: Gulf.
• 4:02
  SPEAKER_00: As of this morning, port prices in Brazil are$452 a ton versus U.S.
• 4:08
  SPEAKER_00: Gulf at$472.
• 4:10
  SPEAKER_00: $20 more expensive here.
• 4:12
  SPEAKER_00: Uh U.S.
• 4:13
  SPEAKER_00: soybean exports are expected to dramatically slow down.
• 4:17
  SPEAKER_00: This is why a export deal with China is so critical.
• 4:21
  SPEAKER_00: If we get big export demand from China, that would really tighten up U.S.
• 4:26
  SPEAKER_00: soybean stocks, especially with our crush rates running so high.
• 4:30
  SPEAKER_00: So, like corn, CBOC, CBOT soybeans should be very well supported on this break.
• 4:38
  SPEAKER_00: Um, on page two, I've got a chart, as I mentioned earlier, of global crude oil inventories.
• 4:44
  SPEAKER_00: This is well worth taking a look at.
• 4:46
  SPEAKER_00: This absolutely scares me to death.
• 4:49
  SPEAKER_00: Um, as far as weather, it looks like the South stays wet from Texas all the way to the Carolinas for all of this week and into early next week.
• 5:01
  SPEAKER_00: Um, north of a line, let's say from Denver to St.
• 5:06
  SPEAKER_00: Louis to Cincinnati.
• 5:09
  SPEAKER_00: North of that line uh looks like you're gonna get very limited moisture, allowing uh planning uh to progress to continue to bigger pace.
• 5:19
  SPEAKER_00: One other item that we've mentioned a while back that we really need to be keeping a watch on is this dryness in the plains.
• 5:27
  SPEAKER_00: We are expecting some smoking hot temperatures um from Oklahoma to the Canadian border, particularly the next two days in parts of Nebraska, South Dakota, and into Montana are supposed to be uh highs well up into the uh low to mid 90s.
• 5:44
  SPEAKER_00: That's all we have for today.
• 5:46
  SPEAKER_00: Thanks for listening.
• 5:47
  SPEAKER_00: We'll be back tomorrow.