Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Sep 11

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Daily Market Podcast Sep 11 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers of William Six Capital Management with our daily market letter on Friday morning, November 11th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down 4 cents at 529.3 quarters.
• 0:11
  SPEAKER_00: November soybeans are down 11.3 quarters at 12, sorry, 13.20 and a half.
• 0:17
  SPEAKER_00: December meal is down 240 at 355.50.
• 0:20
  SPEAKER_00: And October crude is down 310 at 99.30.
• 0:25
  SPEAKER_00: Today is USDA report day.
• 0:27
  SPEAKER_00: At 11 o'clock this morning, Central Time USDA will issue two reports.
• 0:30
  SPEAKER_00: Its monthly crop production report, where we'll update its U.S.
• 0:34
  SPEAKER_00: crop production estimates, and their monthly WISD report.
• 0:38
  SPEAKER_00: That's the World Agricultural Supply and Demand Estimates report, which contains updated estimates of global supply and demand of ag commodities.
• 0:47
  SPEAKER_00: The average guesses for these the numbers coming in these two reports are shown in the table at the bottom of page one.
• 0:56
  SPEAKER_00: As far as corn news this morning, the key number to watch for corn will be the U.S.
• 1:02
  SPEAKER_00: corn yield.
• 1:03
  SPEAKER_00: September USD report is always important, but I don't believe we have ever seen this wide of a range for yield estimates on this September report.
• 1:15
  SPEAKER_00: As you can see in the table on page one, there's almost a 10-bushel range of market yield guesses for the U.S.
• 1:22
  SPEAKER_00: corn yield.
• 1:24
  SPEAKER_00: So, by default, whatever yield USDA comes out with, there will be a lot of people who are just simply wrong.
• 1:32
  SPEAKER_00: As for CBOT corn yesterday, corn rallied following a big rally in crude oil and fuel prices.
• 1:40
  SPEAKER_00: Crude oil got well above$100 again yesterday at one point.
• 1:44
  SPEAKER_00: Well, crude is back lower this morning, and corn is lower also.
• 1:49
  SPEAKER_00: There were also rumors yesterday that China may remove its import tariffs on U.S.
• 1:55
  SPEAKER_00: grains.
• 1:56
  SPEAKER_00: And the market took that to mean here comes China to buy U.S.
• 2:01
  SPEAKER_00: corn.
• 2:02
  SPEAKER_00: Well, the fact of the matter is that China buying U.S.
• 2:05
  SPEAKER_00: grains has zero to do with import tariffs.
• 2:09
  SPEAKER_00: In recent months, China has been buying U.S.
• 2:11
  SPEAKER_00: soybeans, and the entire purchase was made by the government, by the Chinese government.
• 2:18
  SPEAKER_00: And they don't uh they don't charge themselves a tariff.
• 2:21
  SPEAKER_00: And also this way the Chinese government maintains total control.
• 2:27
  SPEAKER_00: So tariffs really have nothing to do with the amount of U.S.
• 2:32
  SPEAKER_00: grain that China may or may not purchase.
• 2:35
  SPEAKER_00: As for the USDA reports in the market today, I highly recommend everybody know where their priced orders are today.
• 2:43
  SPEAKER_00: We could be in for a wild price winks today.
• 2:48
  SPEAKER_00: I'll email out USDA numbers and comments as soon as they are released at 11 o'clock Central Time.
• 2:55
  SPEAKER_00: As far as soybeans like corn, the soybean market rallied yesterday on the same crude rally and the same Chinese rally, Chinese rumors, sorry.
• 3:05
  SPEAKER_00: And this morning, soybeans are back lower, mainly because speculators are taking a break from buying.
• 3:12
  SPEAKER_00: The soybean market finds itself in very interesting territory this morning.
• 3:17
  SPEAKER_00: We now have the largest speculator long positions ever in history.
• 3:23
  SPEAKER_00: And some of those longs, those new long bets, were based on smaller U.S.
• 3:29
  SPEAKER_00: crop ideas in the last month.
• 3:31
  SPEAKER_00: Okay.
• 3:32
  SPEAKER_00: But some of the longs that speculators added in recent days were related to crude oil being firm and ideas of global commodity price inflation.
• 3:44
  SPEAKER_00: And whether we like it or not, these big money inflows into our small lag markets tend to push us around very easily.
• 3:52
  SPEAKER_00: Yes, we have a big USD report today, and their yield estimate will be hugely important today, but over the next few weeks, we could easily see speculators continue their buying spree on ideas of commodity price inflation or whatever it may be.
• 4:09
  SPEAKER_00: Or on the flip side of that coin, if and when this Iran conflict ends, crude oil will very likely have a pretty nasty break.
• 4:18
  SPEAKER_00: And we could see a mass exodus from speculators and sore being prices collapse.
• 4:25
  SPEAKER_00: We are in uncharted waters as far as speculators and soybeans.
• 4:31
  SPEAKER_00: I've obviously got a uh table that's well worth taking a look at at the bottom of page one.
• 4:37
  SPEAKER_00: That is all the average guesses for today.
• 4:39
  SPEAKER_00: And the two big numbers that we need to watch are the U.S.
• 4:43
  SPEAKER_00: corn yield and the U.S.
• 4:44
  SPEAKER_00: soybean yield.
• 4:46
  SPEAKER_00: As far as cattle news this morning, um CME cattle have staged a very impressive$7 rally in the last week.
• 4:53
  SPEAKER_00: This has much more to do with CME cattle prices being pushed too low rather than anything else.
• 4:59
  SPEAKER_00: And all this, with all this speculator selling, CME CME cattle prices late last week were way too far under actual cash cattle prices.
• 5:09
  SPEAKER_00: And one of the two of those had to correct.
• 5:12
  SPEAKER_00: Either cash cattle had a nasty break coming, or CME cattle needed to rally.
• 5:17
  SPEAKER_00: And clearly the latter of those two is what happened.
• 5:20
  SPEAKER_00: Cash cattle seem to have found a low mark and actually look to be very likely up a dollar this week.
• 5:27
  SPEAKER_00: Beef packers have decent margins and cattle feeders have become very stubborn sellers at these low cattle prices.
• 5:35
  SPEAKER_00: As for beef prices, it's kind of hard to rally beef price this time of year.
• 5:40
  SPEAKER_00: Once we get past Labor Day, beef features and grocery stores tend to be few and far between.
• 5:46
  SPEAKER_00: So packers have a margin, at least for now.
• 5:50
  SPEAKER_00: Cattle feeders are stubborn sellers, and CME futures are firm.
• 5:54
  SPEAKER_00: That seems to be a pretty easy recipe for cash cattle prices to remain steady to firm in the near term, such as the next few weeks.
• 6:03
  SPEAKER_00: However, I really don't see much of a chance for a decent rally in cattle until we get well into 2027 and cattle numbers actually begin to tighten up.
• 6:16
  SPEAKER_00: On the first page in the grain comments, we talked about rumors on China.
• 6:23
  SPEAKER_00: With the Trump Z meeting in the White House in two weeks, there will be all kinds of rumors flying around about this previous$17 billion agreement for China to buy U.S.
• 6:33
  SPEAKER_00: ag goods.
• 6:35
  SPEAKER_00: If you remember, earlier in 2026, the market ran with the idea that China would be buying lots of beef.
• 6:41
  SPEAKER_00: We are absolutely not in that camp of thinking at all.
• 6:46
  SPEAKER_00: If, and that is a very large if, if China does actually buy$17 billion worth of U.S.
• 6:52
  SPEAKER_00: ag goods, the beef part of that equation really does not make much sense.
• 6:58
  SPEAKER_00: China has limited their beef imports this year from all nations with higher tariffs on all beef.
• 7:05
  SPEAKER_00: They simply don't want or need more beef in China.
• 7:09
  SPEAKER_00: And if they did, U.S.
• 7:11
  SPEAKER_00: beef is by far the most expensive beef in the world today.
• 7:15
  SPEAKER_00: But this market will shoot first and ask questions later, and it won't let actual facts stand in its way.
• 7:24
  SPEAKER_00: As for the USDA, they will also issue their monthly catalog feed report next Friday.
• 7:32
  SPEAKER_00: We expect August placements into feedlots to be down 5% from last year, and that would be the second smallest August placement number in the past 30 years.
• 7:43
  SPEAKER_00: But marketings out of feedlot remain small also.
• 7:46
  SPEAKER_00: We expect marketings in August to be down 4% from last year, and by far the smallest marketing number in the last 30 years.
• 7:56
  SPEAKER_00: The end result, the cattle on feed remain about 1% above year ago.
• 8:00
  SPEAKER_00: And this looks to be the pattern at least to the end of the year.
• 8:03
  SPEAKER_00: Small placements, small marketings, and okay number of cattle on feed.
• 8:07
  SPEAKER_00: Once we get into 2027, we could easily see cattle numbers begin to tighten up.
• 8:13
  SPEAKER_00: These month after month after month of small placements will eventually catch up with us.
• 8:19
  SPEAKER_00: As for weather, in the uh 1 to 5 and 6 to 10 day time period, we continue to get decent rains in the center of the U.S.
• 8:28
  SPEAKER_00: Corn Belt, Iowa across Illinois, northern parts of Indiana.
• 8:33
  SPEAKER_00: The interesting map to look at today on page three is the map on South America.
• 8:41
  SPEAKER_00: They need some rain.
• 8:43
  SPEAKER_00: Central Brazil, and by this I mean mainly Mato Grosso, is bone dry for the next 10 days.
• 8:51
  SPEAKER_00: And farmers there will wait to start planting soybeans until they get their seasonal rains begin.
• 8:57
  SPEAKER_00: And that's just not in the cards.
• 8:59
  SPEAKER_00: Also, Argentina could use more rains.
• 9:01
  SPEAKER_00: Their main corn belt, main grain belt, uh central southern Santa Fe into Cordoba and Buenos Aires.
• 9:09
  SPEAKER_00: In the next 10 days, they're really only hitting light scattered showers.
• 9:12
  SPEAKER_00: They could use some more rain.
• 9:14
  SPEAKER_00: So that's it for Friday.
• 9:16
  SPEAKER_00: Thanks for listening.
• 9:17
  SPEAKER_00: I will send the US numbers out at 11 o'clock when they come out.
• 9:22
  SPEAKER_00: Other than that, hope everybody has a good weekend.