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Transcript

Daily Market Podcast Jul 8 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with AM6 Capital Management with our daily market letter on Wednesday, July 8th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is unchanged at 464 and a quarter.
• 0:12
  SPEAKER_00: November beans are up three and a quarter at 1201.
• 0:16
  SPEAKER_00: August crude is up 310 at 7350.
• 0:20
  SPEAKER_00: Moving on to corn news this morning.
• 0:24
  SPEAKER_00: Spain, France, Italy, and parts of Germany continued to experience hot, dry weather.
• 0:30
  SPEAKER_00: Temperatures are averaging 15 to 20 degrees above normal.
• 0:35
  SPEAKER_00: And these areas account for somewhere in the neighborhood of 40 to 45% of EU corn production.
• 0:42
  SPEAKER_00: I've got a chart at the bottom of page one that shows starting in um early April through today, uh Matif corn prices.
• 0:54
  SPEAKER_00: That's uh Paris, the Paris market, uh futures market.
• 0:58
  SPEAKER_00: So it's Matif corn prices versus uh CBOT corn.
• 1:03
  SPEAKER_00: And for most of April and the first half of May, they were roughly trading the same price back and forth.
• 1:10
  SPEAKER_00: Today, Matif corn has rallied.
• 1:13
  SPEAKER_00: Well, actually, they've been rallying over the last month, month and a half, but uh today Matif corn is trading 96 cents a bushel higher than uh CBOT corn.
• 1:25
  SPEAKER_00: So clearly the market in Europe is worried about their corn crop, and also that means uh that there is a big import margin for them to bring in corn.
• 1:36
  SPEAKER_00: Uh meanwhile, excuse me, in the U.S., the weather forecast continues to be the same.
• 1:43
  SPEAKER_00: We've got okay rains in the central and southern corn belt for the next few days, and then two weeks of mostly dry weather and lots of heat building.
• 1:50
  SPEAKER_00: The hottest areas will still be Texas to South Dakota.
• 1:54
  SPEAKER_00: Uh, if you look at the maps on page two, they've got some pretty inflammatory temperatures, uh to five hundred to 105 plus uh temps for multiple days, uh particularly in South Dakota.
• 2:07
  SPEAKER_00: But the entire Corn Belt will have above normal temperatures for the next two weeks plus.
• 2:14
  SPEAKER_00: So we should see USDA's weekly crop ratings decline over the next two to three weeks, and the market will use this as an indicator of crop size.
• 2:24
  SPEAKER_00: As we've discussed before, we cannot afford to lose even one to two bushels of yields in the US.
• 2:32
  SPEAKER_00: With speculators still short, CBOT corn, it's pretty easy to argue that we should remain firm for a while, and I still remain longer-term bullish uh CBOT corn futures for reasons that we've discussed um nearly every day here lately.
• 2:48
  SPEAKER_00: Moving on to soybeans, we continue to hear the Chinese are inquiring about US bean prices.
• 2:55
  SPEAKER_00: We've heard that they've bought five cargoes here, two or three cargoes there.
• 3:01
  SPEAKER_00: At some point, the market needs to see USDA make a export sales announcement as per the laws for reporting these sales.
• 3:12
  SPEAKER_00: And yes, the market is concerned about U.S.
• 3:16
  SPEAKER_00: weather, but to be quite honest with you, today I'm much more concerned about the corn crop with this weather than the swimming crop.
• 3:24
  SPEAKER_00: We have all seen way too many times that rains in August are much more meaningful to the U.S.
• 3:28
  SPEAKER_00: bean yield than what happens in July.
• 3:31
  SPEAKER_00: For beans, the crop just needs to get through July and not be in really bad shape.
• 3:35
  SPEAKER_00: Uh, if that happens and you get okay rains in August, you end up with a good bean yield.
• 3:41
  SPEAKER_00: Uh meanwhile, we continue to get estimates for larger soybean plantings this fall in South America.
• 3:48
  SPEAKER_00: Uh just yesterday, the U.S.
• 3:50
  SPEAKER_00: Addish in Brazil came out forecasting Brazilian soybean area up 3%.
• 3:55
  SPEAKER_00: In Argentina, most estimates uh that we hear range from up 3% to up 5% uh in soybean plantings this year.
• 4:05
  SPEAKER_00: Um, as for China, I believe that China buying U.S.
• 4:08
  SPEAKER_00: soybeans is really not longer-term bullish soybean prices.
• 4:13
  SPEAKER_00: If they buy it here, then South America has plenty of beans for everybody else to get because China won't be buying it there.
• 4:20
  SPEAKER_00: But it it does become a little bit of a tricky situation because if China does take 25 million tons of U.S.
• 4:27
  SPEAKER_00: beans, then you've really got more of a basis issue than a futures issue, in my mind.
• 4:33
  SPEAKER_00: And what I mean by that is that at some point it becomes a battle between do the crushers, whether crushers have to pay to keep beans flowing to them because they need uh bean oil flowing out for renewable diesel, and the crushers have to pay enough to keep the beans from flowing to the exporter.
• 4:54
  SPEAKER_00: Um, so we could eventually see that impact U.S.
• 4:59
  SPEAKER_00: meal prices.
• 5:00
  SPEAKER_00: That's gonna be further down the road, but it is something we need to watch.
• 5:03
  SPEAKER_00: Um, I remain in the camp that CBOT soybean rallies are to be sold.
• 5:09
  SPEAKER_00: We're not there yet, but uh longer term, it just becomes if we're gaining soybean area in South America, it really becomes hard to be longer-term bullish beans.
• 5:22
  SPEAKER_00: Moving on to weather, like I said, we've got decent rains the next uh four or five days coming across the central and southern corn belt, and then two weeks of basically open weather.
• 5:31
  SPEAKER_00: Uh, and we've got some smoking hot temperatures uh starting over the weekend into most all of next week uh in the plain states and well above normal temperatures for the corn belt for the next two weeks.
• 5:44
  SPEAKER_00: Uh and then I've got a map for the next seven-day forecast in Europe.
• 5:49
  SPEAKER_00: Spain, uh, France, parts of Germany have basically zero precip for the next seven days.
• 5:56
  SPEAKER_00: And temperatures, you know, 90 plus with quite a few days in France and Spain, uh over 100.
• 6:03
  SPEAKER_00: So uh their crop continues to be in quite a bit of trouble.
• 6:08
  SPEAKER_00: That's it for today.
• 6:09
  SPEAKER_00: Thanks for listening.
• 6:09
  SPEAKER_00: We'll be back tomorrow.