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Daily Market Podcast Jun 9 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Tuesday, June 9th.
• 0:06
  SPEAKER_00: Before we get started today, I do want to say we are working on a report on U.S.
• 0:12
  SPEAKER_00: grains going to China with this potential$17 billion deal and the 25 million tons of beans.
• 0:20
  SPEAKER_00: I hope to get that finished today, and if so, I'll send that out because everybody needs to recognize what that really means to the balance sheet in corn and beans and is it longer-term bullish or not?
• 0:31
  SPEAKER_00: So uh hopefully I get that done today and I'll get it out.
• 0:35
  SPEAKER_00: As far as prices walking in this morning, December corn is up two and a quarter at 448 and a quarter, November beans are down one at 11.34 and a half.
• 0:43
  SPEAKER_00: July crude is down 180 at 89.50.
• 0:47
  SPEAKER_00: On corn news this morning, USD's weekly crop ratings uh were unchanged at 67%, rated good to excellent yesterday.
• 0:56
  SPEAKER_00: And I've got a chart on the bottom of page one that shows this is just slightly below average for this time of year.
• 1:02
  SPEAKER_00: U.S.
• 1:03
  SPEAKER_00: corn planning is basically complete, and I still lean towards us losing some corn acres in Colorado and Kansas due to all the dryness they've had so far this year.
• 1:14
  SPEAKER_00: U.S.
• 1:14
  SPEAKER_00: corn exports last week were massive at 75 million bushels.
• 1:18
  SPEAKER_00: And to put it in perspective, uh to reach USDA's export forecast, we only need to be doing around 52 to 53 million bushels a week.
• 1:27
  SPEAKER_00: What's interesting uh about last week's exports is weekly exports out of the Gulf were the highest in over a year.
• 1:36
  SPEAKER_00: Well, why do we care?
• 1:38
  SPEAKER_00: Well, we all know that corn import demand from Mexico is big because all the cattle that can't cross the border and they're keeping on feed right now.
• 1:45
  SPEAKER_00: But most, but all of that corn flows overland on railroad.
• 1:50
  SPEAKER_00: Big Gulf shipments of corn says that this is really good corn demand globally.
• 1:55
  SPEAKER_00: It's not just Mexico.
• 1:58
  SPEAKER_00: USDA will issue its June Wise report on Thursday.
• 2:01
  SPEAKER_00: We'll have more on that tomorrow.
• 2:03
  SPEAKER_00: Uh, we can easily argue that USDA should increase their U.S.
• 2:07
  SPEAKER_00: corn export forecast, and that would take any stocks lower.
• 2:11
  SPEAKER_00: Spec selling and CBOT corn seems to have run out of steam, at least for right now.
• 2:16
  SPEAKER_00: Uh, but for us to rally, we need some type of catalyst.
• 2:20
  SPEAKER_00: And that could come from either U.S.
• 2:22
  SPEAKER_00: weather, which is non-threatening right now, or from Chinese buying U.S.
• 2:26
  SPEAKER_00: corn.
• 2:27
  SPEAKER_00: And today there is no new news on that, not yet.
• 2:32
  SPEAKER_00: Longer term, I still remain bullish.
• 2:34
  SPEAKER_00: I see this break as a chance to buy.
• 2:36
  SPEAKER_00: As far as soybean news, USDA put the U.S.
• 2:40
  SPEAKER_00: soybean crop condition rating down one point at 65% red good to excellent.
• 2:45
  SPEAKER_00: This is just barely below the average the last 20 years.
• 2:48
  SPEAKER_00: U.S.
• 2:49
  SPEAKER_00: soybean planting is 93% complete, with most states still running ahead of average, and a few states, such as Mexico, still having double crop beans left to plant.
• 2:59
  SPEAKER_00: Weekly, U.S.
• 3:00
  SPEAKER_00: soybean exports fell to the lowest level in 10 months.
• 3:03
  SPEAKER_00: Most of the original 12 million tons of uh soybean business, China is done now, and Brazilian beans are cheaper than the U.S.
• 3:12
  SPEAKER_00: So export business going forward just does not look very good.
• 3:16
  SPEAKER_00: But with our big U.S.
• 3:18
  SPEAKER_00: crush rate, we really don't need to be doing a lot of export business right now.
• 3:22
  SPEAKER_00: That is why this 25 million tons to China could be so meaningful.
• 3:28
  SPEAKER_00: Meanwhile, U.S.
• 3:30
  SPEAKER_00: Gulf meal basis is slipping.
• 3:32
  SPEAKER_00: We're seeing more and more meal competition from both Brazil and Argentina.
• 3:37
  SPEAKER_00: We still have a couple of U.S.
• 3:39
  SPEAKER_00: crushers taking some downtime right now, but when they all get back up and running, it does seem that we will have plenty of U.S.
• 3:46
  SPEAKER_00: meal to go around.
• 3:48
  SPEAKER_00: New U.S.
• 3:49
  SPEAKER_00: meal export demand is definitely slowing down.
• 3:52
  SPEAKER_00: So the next move for U.S.
• 3:55
  SPEAKER_00: domestic meal basis should be lower also.
• 3:59
  SPEAKER_00: Speculators continue to get out of their longs and CBOT soybeans, and that could be the path to least resistance, at least for the next several days.
• 4:06
  SPEAKER_00: As for China, we don't have any new information there, but the market is watching China like a hungry hawk waiting to attack.
• 4:15
  SPEAKER_00: As for weather, uh, we've got decent rains uh in the 1 to 5 and the 6 to 10 day time period uh coming across the Corn Belt and again across the mid-south.
• 4:26
  SPEAKER_00: And I've got a map on page two that has uh 10-day accumulated rains, and the bulk of the grain area, uh particularly let's say uh Omaha, Kansas City, and to the east, the bulk of the corn soybean growing area is getting a pretty general um oh, let's say one and a half to three inches of rain in the next 10 days.
• 4:54
  SPEAKER_00: So as of right now, weather's non threatening.
• 4:58
  SPEAKER_00: The next couple of weeks, U.S.
• 4:59
  SPEAKER_00: corn and soy crop ratings should remain okay.
• 5:03
  SPEAKER_00: That's it for today.
• 5:04
  SPEAKER_00: Thanks for listening.
• 5:04
  SPEAKER_00: We'll be back tomorrow.