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Daily Market Podcast May 27 · 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 for Wednesday, May 27th.
• 0:06
  SPEAKER_00: Walking in this morning, July corn is down one and three quarters at 455 and three quarters.
• 0:12
  SPEAKER_00: July soybeans down one at 11.85.
• 0:15
  SPEAKER_00: And June crude is down 340 at 90.50 this morning.
• 0:20
  SPEAKER_00: As for corn news, U.S.
• 0:22
  SPEAKER_00: corn planting yesterday was 86% complete, but the big question mark in corn planting is Kansas.
• 0:29
  SPEAKER_00: Kansas was 77% planted yesterday, still a little bit behind normal due to ongoing dryness.
• 0:36
  SPEAKER_00: This year, USDA forecast Kansas to plant a record 7.1 million acres of corn.
• 0:42
  SPEAKER_00: And on Monday, May 25th, that was their final plant date for corn in most counties in Kansas, meaning that farmers can now file a claim for prevent plant if they so desire.
• 0:56
  SPEAKER_00: And Kansas, as of Monday, still had 1.6 million acres of corn left to plant.
• 1:04
  SPEAKER_00: That is by far a record amount left to plant on that date.
• 1:08
  SPEAKER_00: So the big question is: does that result in less corn acres planted in Kansas?
• 1:14
  SPEAKER_00: The answer is a very likely yes.
• 1:17
  SPEAKER_00: Yet again, this is just one more longer-term bullish data point for corn.
• 1:24
  SPEAKER_00: But right now, the market is far more interested in crude oil and a big spec loan position than anything else for CBOT corn.
• 1:32
  SPEAKER_00: Meanwhile, U.S.
• 1:34
  SPEAKER_00: weekly corn export pace remains very solid.
• 1:36
  SPEAKER_00: Last week, the U.S.
• 1:37
  SPEAKER_00: shipped 62 million bushels of corn.
• 1:40
  SPEAKER_00: That is well above the pace that we need to be shipping.
• 1:44
  SPEAKER_00: Recent shipments plus this massive outstanding sales implies that USDA's estimate for corn cropier exports for 26, 27 corn exports is way too small.
• 1:59
  SPEAKER_00: Assuming at some point in time, some point down the road, USDA will increase their estimate for corn exports, the end result is less corn ending stocks in the US.
• 2:10
  SPEAKER_00: I'm convinced that the market will be well supported on this blake, on this break, and we remain longer-term bullish CBOT corn.
• 2:18
  SPEAKER_00: As for soybeans, um, last week the president of Indonesia announced that he was setting up a state-controlled agency to monitor and somewhat control commodity export flows.
• 2:34
  SPEAKER_00: Why do we care?
• 2:35
  SPEAKER_00: Well, Indonesia is the number one palm oil producer in the world and the number one palm oil exporter in the world.
• 2:45
  SPEAKER_00: And I've got charts below uh going through global vegetable exports and global palm oil exports.
• 2:53
  SPEAKER_00: Um, palm oil is by far the largest exported veg oil in the world, representing over 50% of all the veg oils traded in the world.
• 3:04
  SPEAKER_00: So globally, palm oil sets the vegetable price level in the world, not soybean oil, not by a long shot.
• 3:12
  SPEAKER_00: There are concerns that the president of Indonesia will now enforce a new export tax because they've he feels like they have the keys to the kingdom.
• 3:25
  SPEAKER_00: A new export tax would make palm oil more expensive to the world, and that would just be bullish for all vegetable prices, including soybean oil.
• 3:35
  SPEAKER_00: At the same time, Indonesia is also debating moving from a 40% biodiesel blend to a 50% blend.
• 3:45
  SPEAKER_00: Thus, that would allow that would mean less palm oil is available for export.
• 3:52
  SPEAKER_00: So in the end, Indonesia holds a lot of potential to make soybean oil prices more bullish.
• 4:00
  SPEAKER_00: Meanwhile, US soybean planting yesterday remained record fast at 79% uh complete versus 68% for the five-year average.
• 4:09
  SPEAKER_00: I continue to lean towards more soybean acres planted than what USDAS made in March.
• 4:16
  SPEAKER_00: Uh, but that's an argument for way down the road.
• 4:19
  SPEAKER_00: Um, CBOT soybeans should be well supported on this break uh as the market awaits for details or some type of confirmation of this trade deal with China, which would be very bullish for beans, especially in the short run.
• 4:35
  SPEAKER_00: Moving on to weather, uh the mid-south and southeast continues to be dripping wet.
• 4:42
  SPEAKER_00: Um, the next four or five days we continue with heavy rains across Arkansas all the way to Georgia.
• 4:49
  SPEAKER_00: Um, and even if you look at the six to ten day time period, the mid south and southeast stays a little bit cooler than normal and above normal rainfall for the foreseeable future.
• 5:00
  SPEAKER_00: So that's it for today.
• 5:02
  SPEAKER_00: Thanks for listening.
• 5:03
  SPEAKER_00: We'll be back tomorrow.