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Transcript

Daily Market Podcast Jun 15 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management on Monday morning, June 15th with our daily market letter.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down four and a half at 435 and three quarters.
• 0:11
  SPEAKER_00: November beans are down four and three quarters at eleven twenty-seven and a quarter.
• 0:15
  SPEAKER_00: July crude is down four sixty at eighty thirty this morning.
• 0:21
  SPEAKER_00: First off, US Iran agreement.
• 0:24
  SPEAKER_00: Yesterday the world was told that U.S.
• 0:26
  SPEAKER_00: and Iran have reached a memo of understanding, which will allow for a ceasefire and the Strait of Hermuz to reopen.
• 0:35
  SPEAKER_00: We are told this memo of understanding is not a final agreement, but rather a 60-day window to allow for further discussions and to finalize more details.
• 0:45
  SPEAKER_00: But I think there are still several big questions this morning.
• 0:49
  SPEAKER_00: Number one, there were reports of multiple versions of this memo of understanding that have been shared with reporters.
• 0:58
  SPEAKER_00: And each version seems to contain very different provisions.
• 1:02
  SPEAKER_00: Which one's right and what's the truth?
• 1:04
  SPEAKER_00: We don't really know.
• 1:05
  SPEAKER_00: Number two, the White House claims that the ceasefire will exist on all fronts.
• 1:11
  SPEAKER_00: But does that mean Israel and Lebanon are included in this?
• 1:15
  SPEAKER_00: Again, we don't know.
• 1:17
  SPEAKER_00: Number three, most of the language in this MOMO of understanding has been released from the White House or from Trump directly.
• 1:26
  SPEAKER_00: But so far there's been very little comment from Iran.
• 1:30
  SPEAKER_00: If history of the last three months matters, we have learned that promises from the White House without confirmation from Iran really does not seem to mean much.
• 1:39
  SPEAKER_00: But hopefully we'll learn more in the next 24-48 hours.
• 1:44
  SPEAKER_00: Energy and equity markets are assuming this is a major step.
• 1:47
  SPEAKER_00: Crude is down 5% this morning, and stocks are up 1%.
• 1:53
  SPEAKER_00: As far as corn news, uh, the most interesting data point on Friday was the CFTC report after the close.
• 2:00
  SPEAKER_00: It showed that large speculators have exited their entire uh net long position in CBOT corn.
• 2:06
  SPEAKER_00: Why do we care?
• 2:08
  SPEAKER_00: Well, that has been the major selling pressure on corn the last several weeks.
• 2:12
  SPEAKER_00: And now that selling pressure seems to be behind us.
• 2:15
  SPEAKER_00: But it's not just corn.
• 2:16
  SPEAKER_00: Speculators have been selling all CBOT grains and oil seeds the last several weeks.
• 2:21
  SPEAKER_00: I've got a chart on the bottom of page one uh showing how much, matter of fact, if we look at that for a second, speculators have sold a whopping 560,000 contracts uh in the last four weeks.
• 2:35
  SPEAKER_00: And that is wheat, corn, beans, oil, and meal combined.
• 2:40
  SPEAKER_00: Um back on corn.
• 2:43
  SPEAKER_00: Uh in the EU, this hot, dry weather persists.
• 2:47
  SPEAKER_00: It's hurting their corn crop the last 30 days.
• 2:50
  SPEAKER_00: Rainfall across Spain, France, and Italy has averaged only 10 to 40 percent of normal, while rainfall in Germany has averaged 40 to 70 percent of normal.
• 3:02
  SPEAKER_00: Precip the next 10 days to two weeks is extremely limited, and temperatures in Spain and France are going to reach the hundreds later this week, uh, with well above normal temperatures all across Europe this uh this entire week and well into next week.
• 3:17
  SPEAKER_00: In Brazil, second corn crop harvest is just beginning in Mato Grosso with very little harvest occurring elsewhere.
• 3:23
  SPEAKER_00: Harvest typically continues into late August.
• 3:28
  SPEAKER_00: This morning, energy prices are being uh drug down by uh energy prices, are sorry, are dragging down uh corn prices.
• 3:37
  SPEAKER_00: I still remain longer term bullish, but we need a trigger.
• 3:41
  SPEAKER_00: And today we don't have a major weather issue in the U.S., nor is China buying U.S.
• 3:46
  SPEAKER_00: grains.
• 3:47
  SPEAKER_00: Either of those happen and we raise higher.
• 3:50
  SPEAKER_00: Meanwhile, China continues to buy corn from Argentina and the Chinese government is auctioning off corn stocks.
• 3:57
  SPEAKER_00: Historically, uh, if they're auctioning off grain stocks this time of year, they do that either because domestic demand is big or they're making a way, uh making way for upcoming big imports, or both.
• 4:12
  SPEAKER_00: So far as soybeans, um, CBOT meal continues to hover around recent lows.
• 4:18
  SPEAKER_00: Both Brazilian and Argentine meal export prices are$30 to$35 below US Gulf over the weekend.
• 4:27
  SPEAKER_00: That's absolutely hurting U.S.
• 4:29
  SPEAKER_00: uh export meal export demand.
• 4:31
  SPEAKER_00: Thus, we are transitioning from a time where U.S.
• 4:34
  SPEAKER_00: crush um we're transitioning into a time where U.S.
• 4:39
  SPEAKER_00: crush is going to remain big, crush margins are huge, still big.
• 4:43
  SPEAKER_00: Meal supplies will begin to build in the U.S.
• 4:47
  SPEAKER_00: Uh I remain cautious on CBOT soybeans.
• 4:51
  SPEAKER_00: If when China comes in and buys U.S.
• 4:53
  SPEAKER_00: beans, we rally.
• 4:55
  SPEAKER_00: But longer term, the world has too many beans.
• 4:57
  SPEAKER_00: It's hard to be longer term bullish CBOT soybeans unless we have some major crop issue here, which obviously right now we don't.
• 5:06
  SPEAKER_00: Moving on to weather, um, the central corn belt has a normal to above normal precip going forward.
• 5:13
  SPEAKER_00: The mid south uh stays dripping wet.
• 5:17
  SPEAKER_00: And I've got several charts in there highlighting uh the hot, dry conditions, ongoing conditions in Europe.
• 5:23
  SPEAKER_00: That's it for today.
• 5:24
  SPEAKER_00: Thanks for listening.
• 5:25
  SPEAKER_00: We'll be back tomorrow.