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Transcript

Daily Market Podcast May 7 · M6 Capital Daily Market Podcast

• 0:01
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter for Thursday, May 7th.
• 0:07
  SPEAKER_00: Walking in this morning, July corn is down one at 467.5.
• 0:11
  SPEAKER_00: July soybeans are up a half at 1195 and a quarter.
• 0:16
  SPEAKER_00: And June crude is down 220 at 92.90.
• 0:21
  SPEAKER_00: In international news, crude oil collapsed yesterday due to multiple comments and social media posts from President Trump stating that a peace deal with Iran was close.
• 0:31
  SPEAKER_00: But then last night, Trump also stated that Iran will be bombed at a much higher rate if they don't agree to his peace proposal.
• 0:40
  SPEAKER_00: So, in other words, global energy markets broke on Trump's comments that a peace deal was close.
• 0:46
  SPEAKER_00: It seems that we've heard this talk before, and yet the conflict has somehow continued.
• 0:51
  SPEAKER_00: Who knows?
• 0:53
  SPEAKER_00: Moving on to corn, CBOT corn along with Matith corn, the futures market in Paris, both broke hard yesterday following crude lower.
• 1:02
  SPEAKER_00: Global wheat markets also broke.
• 1:04
  SPEAKER_00: So now what?
• 1:05
  SPEAKER_00: I am still in the camp that breaks like these should be short-lived, and we still have way too much global production risk and too much U.S.
• 1:14
  SPEAKER_00: corn export demand.
• 1:15
  SPEAKER_00: Yes, crude oil is lower, but that does not in any way eliminate the risk to the corn market.
• 1:21
  SPEAKER_00: Maybe this does lessen the ethanol demand a little.
• 1:25
  SPEAKER_00: Maybe.
• 1:26
  SPEAKER_00: As far as ethanol, I've got a chart at the bottom of page one showing that weekly production has slowed down the last couple of weeks due to some seasonal downtime for maintenance.
• 1:38
  SPEAKER_00: But U.S.
• 1:38
  SPEAKER_00: corn fee demand is big right now.
• 1:41
  SPEAKER_00: Export demand, as we have shown in previous reports, is very big right now.
• 1:46
  SPEAKER_00: And further down the road, U.S.
• 1:48
  SPEAKER_00: export demand could continue to be super strong.
• 1:51
  SPEAKER_00: We just don't know.
• 1:53
  SPEAKER_00: So I remain in the camp that CBOT corn should be well supported on breaks like this, and we still have zero margin for error in northern hemisphere grain production.
• 2:06
  SPEAKER_00: Moving on to soybeans.
• 2:15
  SPEAKER_00: Soybean meal prices broke yesterday, but then overnight they rallied right back to where they started from.
• 2:21
  SPEAKER_00: Whether or not Iran takes this peace deal or not means a lot more to the bean market than it does to corn.
• 2:30
  SPEAKER_00: If we assume for a moment that the Iranian conflict is over and the Strait of Harmoons is open, if we just make that assumption, then soybean oil has likely seen its highs for a little while.
• 2:41
  SPEAKER_00: And maybe, just maybe, this means that more fuel becomes available for ocean-going vessels and thus South America steals back some meal export demand, maybe.
• 2:51
  SPEAKER_00: But there's one more issue that could be at play now.
• 2:54
  SPEAKER_00: The meeting next week with China.
• 2:57
  SPEAKER_00: I contend that as long as we are fighting with Iran and the chances of Trump traveling to China remain quite low.
• 3:06
  SPEAKER_00: But if the peace still holds, then Trump goes to Beijing next week and the market will begin their conversation all over again about China buying more U.S.
• 3:15
  SPEAKER_00: soybeans.
• 3:17
  SPEAKER_00: So the CBOT soybean market in the next one to two weeks could be a very volatile place.
• 3:23
  SPEAKER_00: Also, looking longer term, we're being told from contacts in both Brazil and Argentina that at current high fertilizer prices, farmers in both nations will cut corn plantings and plant more soybeans this next season.
• 3:39
  SPEAKER_00: So, longer term, it looks like global soybean supplies will be big.
• 3:46
  SPEAKER_00: Moving on to weather, it looks like the far south from Dallas, Texas, across uh uh Louisiana, Mississippi, Alabama, Georgia, into the Carolinas will remain wet in the one to five day time period.
• 4:02
  SPEAKER_00: Maybe the eastern corn belt starts to pick up a little bit more rain.
• 4:06
  SPEAKER_00: They really need to be drying out.
• 4:08
  SPEAKER_00: The rest of the corn belt is dry and open, but temperatures in the far north remain a little bit cooled.
• 4:16
  SPEAKER_00: So net net U.S.
• 4:18
  SPEAKER_00: corn planting and bean planting continue.
• 4:21
  SPEAKER_00: Maybe it slows down a little bit, but we are three, four days ahead on both corn and bean planting.
• 4:28
  SPEAKER_00: So U.S.
• 4:29
  SPEAKER_00: planting pace should remain okay.
• 4:32
  SPEAKER_00: In Brazil, the central part of Brazil remains quite dry.
• 4:36
  SPEAKER_00: This is still hurting their corn.
• 4:38
  SPEAKER_00: Their second crop corn was just in the middle of grain filling.
• 4:42
  SPEAKER_00: In Argentina, they're going to be bone dry for the next two weeks.
• 4:46
  SPEAKER_00: Uh, and this should allow uh harvest to continue.
• 4:50
  SPEAKER_00: Farmers down there are focusing mainly on soybeans now, leaving corn in the field to dry down.
• 4:54
  SPEAKER_00: So soybean harvest should really uh advance and play catch up uh because they got off to a slow start.
• 5:01
  SPEAKER_00: That's it for today.
• 5:02
  SPEAKER_00: Thanks for listening.
• 5:03
  SPEAKER_00: We'll be back tomorrow.