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Daily Market Podcast May 6 · 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 6th.
• 0:07
  SPEAKER_00: Walking in this morning, July corn is down nine at 4.71.
• 0:12
  SPEAKER_00: July beans are down 6.5 at 12.05.
• 0:15
  SPEAKER_00: And the reason for all this is crude oil is breaking right now.
• 0:19
  SPEAKER_00: Crude oil is down$8.70 at$93.60, which is actually about$5 off its lows from 30 minutes ago.
• 0:28
  SPEAKER_00: In international news, uh, it's all about U.S.
• 0:32
  SPEAKER_00: Iran this morning.
• 0:33
  SPEAKER_00: Crude oil uh is down hard this morning due to reports that the U.S.
• 0:38
  SPEAKER_00: and Iran are getting close to a peace agreement.
• 0:41
  SPEAKER_00: Who knows if there's any truth behind this whatsoever?
• 0:44
  SPEAKER_00: This news comes at the same time that it's also reported that the U.S.
• 0:48
  SPEAKER_00: has stopped escorting vessels through the Strait of Hermuz because one ship got hit by a missile and another one got hit by something and caught on fire.
• 0:57
  SPEAKER_00: So who knows how this gets resolved.
• 1:00
  SPEAKER_00: On to corn, uh global corn demand remains super strong.
• 1:04
  SPEAKER_00: It looks like April corn exports from the largest four origins, and that would be US, Brazil, Argentina, Ukraine, was a little over 16 million tons.
• 1:14
  SPEAKER_00: That would be the fourth largest corn exports for any month ever.
• 1:20
  SPEAKER_00: Also, at the same time, U.S.
• 1:22
  SPEAKER_00: outstanding corn export sales are big.
• 1:25
  SPEAKER_00: We're up a little over 40% from the same time a year ago.
• 1:29
  SPEAKER_00: Meanwhile, ethanol production in the United States remains uh reasonably large.
• 1:35
  SPEAKER_00: And most importantly, U.S.
• 1:38
  SPEAKER_00: ethanol exports are huge.
• 1:40
  SPEAKER_00: That's the big driver in the uh ethanol production right now.
• 1:44
  SPEAKER_00: But all this does really not really seem to matter this morning.
• 1:48
  SPEAKER_00: It's all about crude breaking eight, nine dollars and dragging everything else down with it.
• 1:53
  SPEAKER_00: Um I still contend that the U.S.
• 1:57
  SPEAKER_00: corn demand is very strong and we are still losing global grain production.
• 2:03
  SPEAKER_00: And breaks like this one should be short-lived.
• 2:06
  SPEAKER_00: Matter of fact, on that production front, there are multiple nations in Europe that have reported in the last week that their corn planted area this year will be the smallest in at least 10 years.
• 2:19
  SPEAKER_00: That's going to come back to honest at some point in time.
• 2:22
  SPEAKER_00: CBOT corn should be well supported on breaks like this.
• 2:25
  SPEAKER_00: And I am still very much afraid that the slightest little hiccup in crop weather in the northern hemisphere and we will see CBOT corn race higher.
• 2:36
  SPEAKER_00: We have zero margin for error, at least in corn, wheat, barley, in the grain side of things.
• 2:44
  SPEAKER_00: Now onto soybeans.
• 2:45
  SPEAKER_00: Um recent U.S.
• 2:47
  SPEAKER_00: biofuels data shows that renewable diesel plants in the United States are now running around 70% of capacity.
• 2:55
  SPEAKER_00: I've got that uh in the chart at the bottom of the page.
• 2:58
  SPEAKER_00: And monthly production has jumped up to near record levels.
• 3:02
  SPEAKER_00: But this big biofuel mandate and the big veg oil demand has not translated into a big win for U.S.
• 3:11
  SPEAKER_00: farmers.
• 3:12
  SPEAKER_00: Instead, it has translated into a massive victory for U.S.
• 3:17
  SPEAKER_00: crushers.
• 3:17
  SPEAKER_00: U.S.
• 3:18
  SPEAKER_00: crush margins are$3.20 to$3.60 a bushel across the corn belt.
• 3:24
  SPEAKER_00: These are the highest crush margins ever reported by a long shot.
• 3:30
  SPEAKER_00: As for meal, export demand remains super strong.
• 3:34
  SPEAKER_00: Uh you outstanding U.S.
• 3:36
  SPEAKER_00: export sales for soybean meal are the largest ever on this date.
• 3:41
  SPEAKER_00: Yesterday there was some talk that it pencils in to bring some cheap Argentina meal into the East Coast of the United States.
• 3:50
  SPEAKER_00: We've checked on that.
• 3:51
  SPEAKER_00: That is not correct.
• 3:53
  SPEAKER_00: Yes, it has happened before, but when it has happened, it's always small vessels, and in the grand scheme of life, it never really amounts to anything significant.
• 4:04
  SPEAKER_00: As for the U.S.-China talks next week, we still have quite a few ongoing issues with China.
• 4:11
  SPEAKER_00: One uh a major issue we have is that the Chinese government has instructed Chinese oil refiners to continue buying Russian-sanctioned oil against the request of U.S.
• 4:22
  SPEAKER_00: officials.
• 4:23
  SPEAKER_00: So who knows how these talks go.
• 4:25
  SPEAKER_00: In the near term, CBOT soybean oil uh remains tied to crude on this break, but overall demand for soybean products, oil and beans, I mean oil and meal in the U.S.
• 4:39
  SPEAKER_00: remains big.
• 4:40
  SPEAKER_00: So this break should be short-lived.
• 4:44
  SPEAKER_00: On to weather, the far south part of the United States, uh, let's say from Dallas, Texas, to Memphis to Atlanta, Georgia, and down to the coast, is going to remain uh relatively wet for the uh in the near term, the next four or five days.
• 5:02
  SPEAKER_00: And the rest of the Corn Belt is uh looks like it's getting a little bit of moisture in the near term and regular moisture um going forward.
• 5:13
  SPEAKER_00: If you look at the six to ten and eight to fourteen day forecast um from South Texas uh across uh the south up through Missouri, Tennessee, Kentucky, all the way up to Chicago area.
• 5:29
  SPEAKER_00: Looks like they're gonna get normal to maybe slightly above normal uh for the foreseeable future for the next uh two weeks at least.
• 5:38
  SPEAKER_00: Uh, and that should be, you know, allow planning progress to continue at a somewhat normal pace.
• 5:44
  SPEAKER_00: Soil temperatures are still very cold in the far north, so those states may be running a little bit slow.
• 5:50
  SPEAKER_00: We did have some uh really cold temperatures into uh South Dakota, parts of western Nebraska last night.
• 6:00
  SPEAKER_00: Uh, but temperatures are really warming back up fast.
• 6:04
  SPEAKER_00: By the time we get into Friday and then Saturday, uh, we're gonna have temperatures in the Texas panel handle up into southwest Kansas, well into the 90s again.
• 6:15
  SPEAKER_00: So um, that's it for today.
• 6:17
  SPEAKER_00: Thanks for listening.
• 6:18
  SPEAKER_00: We'll be back tomorrow.