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Daily Market Podcast May 18 · 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 on Monday, May 18th, 2026.
• 0:08
  SPEAKER_00: Walking in this morning, July corn is up 15 and three quarters at 471.5.
• 0:13
  SPEAKER_00: July soybeans are up 26 at 12.03.
• 0:16
  SPEAKER_00: June crude is down 20 cents at 100.80.
• 0:22
  SPEAKER_00: Walking in this morning, it's all China, China, China.
• 0:26
  SPEAKER_00: After a complete lack of information on Thursday morning or Friday morning last week, ag markets as the Chicago border trade collapsed.
• 0:35
  SPEAKER_00: The market was looking for some amount of Chinese ag purchases, and we did not get any information regarding that on Thursday or Friday mornings.
• 0:44
  SPEAKER_00: But then Friday afternoon happened.
• 1:03
  SPEAKER_00: And in the report, I've got a link to that press release.
• 1:08
  SPEAKER_00: It is widely believed that these ag purchases will be spread across major export sectors, including soybeans, corn, sorghum, pork, beef, poultry, dairy, cotton, and ethanol-related products.
• 1:25
  SPEAKER_00: And a lot of people are leaning on the 2020-21 agreement to come up with some of those ideas.
• 1:31
  SPEAKER_00: The details to this deal are quite fuzzy, and we're still trying to get our arms around this.
• 1:38
  SPEAKER_00: But here's two major questions that we have regarding this.
• 1:42
  SPEAKER_00: Is this$17 billion on top of, therefore, in addition to the 25 million tons of soybeans that China agreed to purchase last October?
• 1:54
  SPEAKER_00: We believe it is.
• 1:56
  SPEAKER_00: Number two, the announcement states that the U.S.
• 2:01
  SPEAKER_00: and China will establish a board of trade to manage the trade.
• 2:06
  SPEAKER_00: What is this board of trade?
• 2:08
  SPEAKER_00: How does it work?
• 2:09
  SPEAKER_00: We have no clue.
• 2:11
  SPEAKER_00: What we do know is that the Chinese economy is not in good shape.
• 2:16
  SPEAKER_00: The government has already instructed large hog producers to slow down, and they have put import quotas on beef from multiple nations.
• 2:24
  SPEAKER_00: So it seems logical that importing meats would not be high on this list.
• 2:30
  SPEAKER_00: So if we look at it from a corn aspect, as we reported last week, it is widely assumed that China had some 30 million tons, plus or minus, of very poor quality corn that was harvested last fall.
• 2:45
  SPEAKER_00: That corn was severely damaged from flooding.
• 2:48
  SPEAKER_00: At the same time, it is reported that Chinese industrial use of corn for starch, high fructose corn syrup, and related sugars has grown rapidly.
• 3:00
  SPEAKER_00: Of all the items that China could give in and agree to take, corn does logically seem like the easiest one.
• 3:08
  SPEAKER_00: We would not be surprised, irregardless of this deal, we would not be surprised to see China importing corn from someone later this summer.
• 3:16
  SPEAKER_00: And historically, that would probably be either Ukraine or Brazil.
• 3:20
  SPEAKER_00: So let's do some math here.
• 3:22
  SPEAKER_00: As of prices this morning,$1 billion of U.S.
• 3:25
  SPEAKER_00: corn is 213 million bushels.
• 3:29
  SPEAKER_00: And that would be new US export demand.
• 3:33
  SPEAKER_00: So$2 billion or$3 billion a year starts to add up very fast, especially when we are starting with a$1.9 billion bushel carryout for the 26-27 crop year.
• 3:49
  SPEAKER_00: That's the number the USDA gave us last week.
• 3:52
  SPEAKER_00: Now we have to ask the age old question: will this be new demand to the world?
• 3:58
  SPEAKER_00: Or do we get Chinese business and the other exporters simply take the rest of the business to the world that we were getting?
• 4:06
  SPEAKER_00: Well, today, U.S.
• 4:08
  SPEAKER_00: export business is big and going forward it looks to be big because the world is getting very little corn from Brazil or Ukraine.
• 4:19
  SPEAKER_00: So it becomes pretty easy to assume that this Chinese business results in smaller U.S.
• 4:25
  SPEAKER_00: corn ending stocks.
• 4:26
  SPEAKER_00: If we get the new export business and keep the bulk of the original business that we have.
• 4:33
  SPEAKER_00: Matter of fact, this morning I am sitting here wondering why corn is not limited bid on the Chicago border trade.
• 4:41
  SPEAKER_00: As I go through this logically, I fully believe that this is wildly bullish corn prices.
• 4:47
  SPEAKER_00: We have stated for weeks that we have zero room for error on this U.S.
• 4:51
  SPEAKER_00: crop.
• 4:52
  SPEAKER_00: Well, we just got a big increase in demand, and it has the same effect.
• 4:57
  SPEAKER_00: So now the market is closely watching for Chinese purchases.
• 5:02
  SPEAKER_00: What will they buy and when?
• 5:04
  SPEAKER_00: If we see them buying corn for export, then this is crazy bullish for the corn market.
• 5:11
  SPEAKER_00: Moving on to soybeans, we read this news announcement as new agreed to purchases for U.S.
• 5:21
  SPEAKER_00: ag items, and this is not on top of uh I'm sorry, this is on top of the U.S.
• 5:28
  SPEAKER_00: uh agreement uh with China last October for 25 million tons of corn of soybeans.
• 5:36
  SPEAKER_00: I'm gonna restate that we read this news announcement that this is new agreed to purchase amounts of ag items, and this is on top of the 25 million tons of U.S.
• 5:49
  SPEAKER_00: soybeans that China agreed to purchase last October.
• 5:53
  SPEAKER_00: But let's just admit this, this is politics and this is China, and we just simply do not know.
• 6:00
  SPEAKER_00: And we cannot overlook the fact that China has a very long history of not following through with the entirety of their agreements.
• 6:06
  SPEAKER_00: But it doesn't take much imagination to see that if the U.S.
• 6:10
  SPEAKER_00: starts exporting quite a few beans to China and our crush in the U.S.
• 6:17
  SPEAKER_00: is staying big, then U.S.
• 6:18
  SPEAKER_00: soybean ending stocks get smaller and smaller and smaller.
• 6:23
  SPEAKER_00: CBOT soybeans should continue to trade steady to firm on this news for a while, at least until we get more details or until we see what China is actually buying.
• 6:36
  SPEAKER_00: Moving on to weather, it looks like uh we're going to uh uh provide quite a bit of moisture to the some of these drought areas across the south from uh Texas across to Arkansas, Tennessee, up into uh Illinois this week, and then next week it looks like from Texas all the way to the Carolinas gets another round of rain.
• 7:00
  SPEAKER_00: So the dry areas in the U.S.
• 7:03
  SPEAKER_00: look like they're going to get smaller, particularly in the far southern plains and the mid-south and southeast.
• 7:11
  SPEAKER_00: Uh on the flip side of that coin, Brazil is staying bone dry.
• 7:17
  SPEAKER_00: Um, most of the corn, the second crop corn area in Mato Grosso, Goias, Mato Grosso do Sul is completely lacking any uh forecast rain for the next 10 days plus.
• 7:35
  SPEAKER_00: Um, and those areas represent easily two thirds of the second crop corn.
• 7:42
  SPEAKER_00: And this is right in the middle of their cornfield.
• 7:44
  SPEAKER_00: This is bad news.
• 7:46
  SPEAKER_00: That's all we have for today.
• 7:48
  SPEAKER_00: Thanks for listening.
• 7:49
  SPEAKER_00: We'll be back tomorrow.
• 7:50
  SPEAKER_00: Thanks.