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Daily Market Podcast Jun 8 · 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, June 8th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down three and three quarters at 442 and a quarter.
• 0:11
  SPEAKER_00: November soybeans down eight at 11.29.5.
• 0:14
  SPEAKER_00: July crude is up 105 at 91.60.
• 0:19
  SPEAKER_00: Couple of things before we get to corn and beans this morning.
• 0:21
  SPEAKER_00: Screw worm.
• 0:22
  SPEAKER_00: On Friday, USDA confirmed a second case of New World Screwworm, just six miles from the first case in Zavala County, Texas, in a young calf.
• 0:32
  SPEAKER_00: We have to believe that there will be other cases.
• 0:35
  SPEAKER_00: So far, the market has obviously not behaved like I thought it would.
• 0:39
  SPEAKER_00: From the first case being announced to the close on Friday, CME cattle uh actually rallied$4.
• 0:46
  SPEAKER_00: I quite obviously believe that CMA cattle would have broken quite a bit from this news.
• 0:52
  SPEAKER_00: Also, on Friday, uh President Trump was at in Wisconsin at an agricultural roundtable event, and he told farmers that they would, and I quote, see some very good things happen over the next 90-day period.
• 1:08
  SPEAKER_00: So during that event, they discussed high input costs, fertilizers and fuel, and they talked about tariff and trade issues and whatnot, but he failed to say what these good things might be.
• 1:23
  SPEAKER_00: Also, uh, so moving on to corn.
• 1:25
  SPEAKER_00: Um, given the massive speculator selling in corn, walking in this morning, the spec in corn is now long only about 70,000 contracts.
• 1:37
  SPEAKER_00: This is way down from the 350,000 contract long just a few weeks ago.
• 1:42
  SPEAKER_00: USD will issue their weekly crop progress report today, and we expect that to show corn conditions steady with a week ago.
• 1:50
  SPEAKER_00: However, I still believe that we need to keep an eye on the plain states.
• 1:54
  SPEAKER_00: On uh page two, I've got some temperature forecast for Tuesday and Wednesday, and they've got uh several days of over 100 degree temperatures in Kansas coming.
• 2:04
  SPEAKER_00: U.S.
• 2:05
  SPEAKER_00: corn export sales last week continue to be big, and at the same time, export liners from Argentina are growing.
• 2:11
  SPEAKER_00: But on the flip side of that coin, uh we still have a situation where Brazil is hardly shipping any corn right now.
• 2:19
  SPEAKER_00: Uh domestic prices are are still quite expensive in Brazil, and very little corn is flowing to the export market.
• 2:26
  SPEAKER_00: And uh Ukraine corn export pace is very erratic uh and unpredictable due to the ongoing uh battle with Russia.
• 2:38
  SPEAKER_00: So for the foreseeable future, it looks like U.S.
• 2:40
  SPEAKER_00: corn export demand remains very large.
• 2:43
  SPEAKER_00: Driving forces today in the corn market is twofold.
• 2:47
  SPEAKER_00: One, weather in the U.S.
• 2:49
  SPEAKER_00: uh remains okay for the moment.
• 2:51
  SPEAKER_00: And therefore, number two, speculators continue to liquidate longs.
• 2:55
  SPEAKER_00: I continue to see this break as an opportunity to buy.
• 2:58
  SPEAKER_00: Longer term, I remain bullish CBOT corn.
• 3:02
  SPEAKER_00: Moving on to soybeans.
• 3:04
  SPEAKER_00: Uh CBOT soybeans are trading the lowest price since early February with the potential for more UF tariffs on China.
• 3:13
  SPEAKER_00: The market is assuming that China is a no-go for a while.
• 3:17
  SPEAKER_00: And today it's kind of hard to argue with that thought.
• 3:19
  SPEAKER_00: There are so many unknowns regarding China.
• 3:23
  SPEAKER_00: South American soybean supplies remain plenty big.
• 3:27
  SPEAKER_00: So as of today, the world is assuming we have plenty of beans.
• 3:31
  SPEAKER_00: Matter of fact, if you if we did go back and you assume that China did take 25 million tons of U.S.
• 3:39
  SPEAKER_00: beans, that would obviously significantly tighten up the U.S.
• 3:43
  SPEAKER_00: soybean supply.
• 3:44
  SPEAKER_00: And several weeks ago, CBOT board crush margins were trading that, and they reached a record high$4.25 crush margin on that thought.
• 3:55
  SPEAKER_00: Today, crush margins have dropped over 50 cents and are now trading$3.70.
• 4:00
  SPEAKER_00: Still quite expensive, but way off the highs.
• 4:03
  SPEAKER_00: Uh, meal prices continue to break in Argentina and Brazil, and both countries are beginning to steal some of our meal export business.
• 4:11
  SPEAKER_00: So the next move for U.S.
• 4:13
  SPEAKER_00: meal is to lose exports.
• 4:15
  SPEAKER_00: Uh, exports sales should decline, maybe even quite a bit.
• 4:19
  SPEAKER_00: Speculators still have quite a large long in CBFT soybeans, so we could continue to see more selling there in the near term.
• 4:28
  SPEAKER_00: And without anything new or bullish uh from China, I think the path least resistance right now is lower.
• 4:35
  SPEAKER_00: Moving on to weather, uh the next uh four or five days, we have quite a weather event coming across the center of the country, uh bringing one to two inches general rains, and then follow that up in the six to ten with again uh quite nice rains.
• 4:53
  SPEAKER_00: Uh if you look six to ten and even out uh on out to eight to fourteen day time period, we've got normal to above normal rains uh continuing across most of the uh uh the corn and soy growing areas.
• 5:08
  SPEAKER_00: The one item that I think we need to watch is uh out west.
• 5:12
  SPEAKER_00: You like I said, you got some 100 to 105 degree temperatures uh for several days in uh from the Texas panel well up into Kansas that we need to keep an eye on.
• 5:24
  SPEAKER_00: That's it for today.
• 5:25
  SPEAKER_00: Thanks for listening.
• 5:25
  SPEAKER_00: We'll be back tomorrow.