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Transcript

Daily Market Podcast May 4 · 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 Monday, May 4th.
• 0:08
  SPEAKER_00: Walking in this morning, July corn is down 1.25 at 479.
• 0:11
  SPEAKER_00: July soybeans are up five and three quarters at$12.09.
• 0:16
  SPEAKER_00: And June crude is up$1.50 at$103.40.
• 0:20
  SPEAKER_00: As far as international news regarding the U.S.-Iran conflict, both nations floated peace proposals over the weekend, with both being totally rejected.
• 0:30
  SPEAKER_00: So it looks like this mess won't be resolved anytime soon.
• 0:34
  SPEAKER_00: Also, there are multiple international trading firms that are putting out estimates of global crude inventories, showing that stocks in the world right now are at some of the lowest levels we have seen in many, many years.
• 0:47
  SPEAKER_00: So if and when this mess with Iran is ever over and the Strait of Harmuz opens, that may not mean that crude oil prices totally collapse.
• 0:57
  SPEAKER_00: I think we could easily see import demand around the world remain very strong for a while as these nations rebuild their crude oil inventories to whatever they deem acceptable.
• 1:09
  SPEAKER_00: Something to think about.
• 1:10
  SPEAKER_00: Moving on to corn.
• 1:12
  SPEAKER_00: Supposedly Trump and Chinese President Z are set to meet sometime in the middle of May.
• 1:17
  SPEAKER_00: According to all the talk and market rumors, there are discussions that China may be interested in buying U.S.
• 1:23
  SPEAKER_00: corn due to some quality issues with their 2025 crop.
• 1:30
  SPEAKER_00: First, this is a political conversation with all the mess that goes with that.
• 1:34
  SPEAKER_00: So who really knows?
• 1:35
  SPEAKER_00: Okay.
• 1:36
  SPEAKER_00: But second, if China really needed the corn, we would see them buying corn from Argentina and Ukraine.
• 1:43
  SPEAKER_00: And thus far that just ain't happening.
• 1:46
  SPEAKER_00: So I think the likelihood of them buying U.S.
• 1:50
  SPEAKER_00: corn is not too great today.
• 1:52
  SPEAKER_00: But this is China and we've all seen how this rumor meal goes.
• 1:57
  SPEAKER_00: Also, USDA data released Friday shows that sorghum use for ethanol production in the U.S.
• 2:04
  SPEAKER_00: is more than double what it was last year.
• 2:07
  SPEAKER_00: It seems that this big core uh big sorghum crop that we had in 2025 is finding a home.
• 2:14
  SPEAKER_00: Ethanol.
• 2:15
  SPEAKER_00: Also, we have discussed speculators buying U.S.
• 2:18
  SPEAKER_00: aggs.
• 2:19
  SPEAKER_00: The large specs bought another 80,000 contracts of corn last week.
• 2:24
  SPEAKER_00: That puts them along around 270,000 contracts of CBOT corn versus an all-time record of 400,000.
• 2:32
  SPEAKER_00: So they clearly can buy more.
• 2:35
  SPEAKER_00: I remain in the camp that CBOT corn will be well supported on breaks and any crop issues that come up, corn rallies pretty easily.
• 2:44
  SPEAKER_00: Moving on to soybeans, on Friday, USDA released March crush data showing yet another month of record U.S.
• 2:53
  SPEAKER_00: soybean crush.
• 2:54
  SPEAKER_00: The interesting part of this equation was the meal production and implied domestic meal use.
• 3:00
  SPEAKER_00: Soybean meal production for March was up a whopping 12% year over year.
• 3:05
  SPEAKER_00: Yes, meal exports are decent, but this data implies that Jan Fab March domestic meal use in the United States was up 8% from a year ago.
• 3:17
  SPEAKER_00: So, with this recent price rally in lysine, the very strong meal export demand right now, and this base for strong U.S.
• 3:26
  SPEAKER_00: meal consumption, all that combined will keep cash meal prices very firm.
• 3:31
  SPEAKER_00: Argentina crush is picking up, and it'll be interesting to see if Argentina meal values stay low enough to steal a significant amount of U.S.
• 3:39
  SPEAKER_00: crush bit U.S.
• 3:41
  SPEAKER_00: meal export business or not.
• 3:43
  SPEAKER_00: Personally, I think that'll take a while, especially being as global meal demand is very strong right now, and the EU's genetic issues that they're having with Argentina meal.
• 3:56
  SPEAKER_00: CBOT soybean oil rallied to new contract highs on Friday.
• 4:00
  SPEAKER_00: This surge in diesel and heating oil prices are very supportive to soybean oil.
• 4:06
  SPEAKER_00: U.S.
• 4:06
  SPEAKER_00: crush margins remain over$3 a bushel, which is unheard of.
• 4:11
  SPEAKER_00: So, yet again, with strong meal demand, strong bean oil demand, the resulting strong crush margins, it will be hard to break soybeans right now.
• 4:21
  SPEAKER_00: The chart today is I've got Jan Feb March domestic meal use in the United States showing how big it is.
• 4:29
  SPEAKER_00: Um and again, that's up a whopping 8% year over year.
• 4:34
  SPEAKER_00: As far as weather goes, um looks like the mid-south into parts of the eastern corn belt will get okay rains uh in both the one to five and six to ten day time period.
• 4:46
  SPEAKER_00: Um the north, central, and western cornbelt will remain mostly dry, but they're gonna uh at least the early part of this week, they're gonna have cool temperatures.
• 4:56
  SPEAKER_00: I've also got a chart in today of U.S.
• 4:59
  SPEAKER_00: soil moisture, and this still is something that just really, really bugs me.
• 5:04
  SPEAKER_00: This is not a way that we want to start a growing season.
• 5:06
  SPEAKER_00: You've still got most of the mid-south uh into Oklahoma, panhandle of Texas, uh South Central Kansas that is really dry.
• 5:16
  SPEAKER_00: You've also got another dry area up in Nebraska, southern part of South Dakota.
• 5:20
  SPEAKER_00: This is too big of a dry area to start a growing season, especially this year when we have no margin for error.
• 5:29
  SPEAKER_00: So this is something we need to watch.
• 5:32
  SPEAKER_00: Thanks for listening.
• 5:33
  SPEAKER_00: That's all I have today.
• 5:34
  SPEAKER_00: We'll talk again tomorrow.