Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Nov 3

Transcript

Daily Market Podcast Nov 3 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Tuesday morning, November 3rd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down 3.5 at 444 and 3 quarters.
• 0:11
  SPEAKER_00: January beans are down a half at 1216.
• 0:15
  SPEAKER_00: December meal is down$1.90 this morning, making new loaves for the move.
• 0:20
  SPEAKER_00: And December crude is up a dollar at$97.50 this morning.
• 0:25
  SPEAKER_00: As far as corn news, the drought damaged corn crop in Europe continues to get smaller.
• 0:30
  SPEAKER_00: The European Commission cut their estimate of corn production 1.3 million tons over the weekend to 47 million tons.
• 0:38
  SPEAKER_00: This is down 10 million tons from a year ago.
• 0:40
  SPEAKER_00: So far, we have not seen EU corn imports pick up, not yet, at least.
• 0:46
  SPEAKER_00: They harvested their wheat crop in June and July, and the corn crop in September.
• 0:50
  SPEAKER_00: So right now they have decent feed grain supplies.
• 0:53
  SPEAKER_00: But sooner or later, they will have to really, really pick up corn imports, likely to record large amounts.
• 1:01
  SPEAKER_00: Ukraine corn exports continue to be very small.
• 1:04
  SPEAKER_00: September and October look to be somewhere in the neighborhood of 200 to 300,000 tons a month.
• 1:10
  SPEAKER_00: Most of that is flowing over uh roadways, not through um uh ocean ports.
• 1:16
  SPEAKER_00: That's versus a normal of a million and a half to two million tons a month.
• 1:20
  SPEAKER_00: They should be doing this time of year.
• 1:22
  SPEAKER_00: There are discussions to limit the war activities between Russia and Ukraine at port facilities and in the Black Sea.
• 1:31
  SPEAKER_00: Who knows if or when this will ever work?
• 1:34
  SPEAKER_00: But there is a mountain of cheap corn in Ukraine that will be looking for a home.
• 1:40
  SPEAKER_00: Whenever it is safe for ocean vessels to export corn from Ukraine, we should see huge export volumes very quickly.
• 1:49
  SPEAKER_00: Meanwhile, U.S.
• 1:51
  SPEAKER_00: corn harvest is 70 uh 74% complete, slightly behind the average of 77%.
• 1:58
  SPEAKER_00: Harvest should be slow this week due to rains, but temperatures remain above average.
• 2:03
  SPEAKER_00: Uh and next week looks like it should be wide open for harvest with no rainfall.
• 2:08
  SPEAKER_00: We do not see any issues with the end of harvest in the U.S.
• 2:11
  SPEAKER_00: In the near term, we could see corn trade uh mostly sideways, lacking direction.
• 2:17
  SPEAKER_00: Longer term, if corn crops in South America end up as big as we expect, CBFT corn should head below$4.25.
• 2:26
  SPEAKER_00: But that would likely be March, April time period.
• 2:29
  SPEAKER_00: And those crops in South America have a lot of growing season ahead of them.
• 2:33
  SPEAKER_00: As far as soybean news, the soybean market took it on the chin yesterday, closing down 17 cents at the lowest level since early August.
• 2:42
  SPEAKER_00: Crude oil ended the day down$7.5 on peace talks with Iran, and that fueled a big break in soybean oil.
• 2:49
  SPEAKER_00: The meal market has no friends right now and ended the day down five.
• 2:53
  SPEAKER_00: In Brazil, soybean planting pace is 54% complete, which is one of the fastest paces ever.
• 3:01
  SPEAKER_00: It is very interesting that planting in the very wet, dripping wet state of Paraná is only two to three days behind average.
• 3:09
  SPEAKER_00: That's not nearly as big an issue as we had worried about, and not as big an issue as the market had feared.
• 3:18
  SPEAKER_00: I would still personally still like to see less rainfall in Paraná, let the crop get in and get it get rooted down some.
• 3:26
  SPEAKER_00: The rest of Brazil, Paraguay, and Argentina looks like they're in great shape for weather and for planting season.
• 3:32
  SPEAKER_00: Without some additional outside influence, like crude oil breaking$7 in a day, I suspect that CBOT soybeans trade mostly sideways.
• 3:41
  SPEAKER_00: Rallies should be sold.
• 3:43
  SPEAKER_00: If crops in Brazil and Argentina end up as big as we suspect, then CBOT March and May and July soybean contracts should all trade$11.50 to$12, maybe even cheaper.
• 3:57
  SPEAKER_00: But we have to make the crop in South America first.
• 4:01
  SPEAKER_00: One thing we have not discussed in quite a while is the Mississippi levels.
• 4:05
  SPEAKER_00: I've got a chart on the bottom of page one is the Mississippi at Cruthersville, Missouri.
• 4:11
  SPEAKER_00: This is below the point where the Ohio dumps into it.
• 4:14
  SPEAKER_00: It is very low right now.
• 4:17
  SPEAKER_00: We've got a bubble of water coming down that's gonna raise the liver, the river levels from current three foot back up to about eight foot.
• 4:26
  SPEAKER_00: And then by the end of this month, they're supposed to be even lower back down at about two and a half feet.
• 4:31
  SPEAKER_00: That's gonna do two things.
• 4:33
  SPEAKER_00: That's gonna number one, keep freight rates, barge freight rates very high, and it keeps us uncompetitive for exports for corn and beans.
• 4:42
  SPEAKER_00: But also, if we spend very much time down at that three foot, two and a half foot level, then at some point in time we eventually slow down grain exports flowing down the river.
• 4:53
  SPEAKER_00: So we need to watch that.
• 4:55
  SPEAKER_00: As far as weather, we've got this rain system coming across uh the next several days across the uh the corn belt.
• 5:02
  SPEAKER_00: It's gonna keep us wet, keep harvest slow.
• 5:04
  SPEAKER_00: Next week looks like it's just gonna be wide open.
• 5:07
  SPEAKER_00: They should just be blowing and going, finishing up harvest.
• 5:10
  SPEAKER_00: Temperatures look like they're gonna be above average to much above average uh for the foreseeable future.
• 5:17
  SPEAKER_00: So that's gonna keep harvest going.
• 5:19
  SPEAKER_00: As far as South America, again, we're still too wet in Paraná.
• 5:23
  SPEAKER_00: I would personally like to see some of that rainfall back off just to let the crop get uh rooted down and get established.
• 5:28
  SPEAKER_00: The rest of South America looks like they're doing okay for soil moisture, especially being as we're just in planting season.
• 5:34
  SPEAKER_00: That's it for today.
• 5:35
  SPEAKER_00: Thanks for listening.
• 5:36
  SPEAKER_00: We'll be back tomorrow.