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Transcript

Daily Market Podcast May 14 · 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 Thursday, May 14th.
• 0:06
  SPEAKER_00: Walking in this morning, July corn is down six and a half at 474 and three quarters.
• 0:12
  SPEAKER_00: July soybeans are down 27.25 at 1201.5.
• 0:16
  SPEAKER_00: June crude is down a dollar at$100 even.
• 0:20
  SPEAKER_00: In Corn News this morning, Trump and Z had a two-hour meeting while we were asleep.
• 0:25
  SPEAKER_00: Leading up to that meeting, there were multiple statements that Trump would push for more corn and sorghum and DDG purchases from China.
• 0:34
  SPEAKER_00: But we got no comments on that overnight.
• 0:36
  SPEAKER_00: But we did learn that China has renewed import licenses for most U.S.
• 0:41
  SPEAKER_00: beef plants.
• 0:42
  SPEAKER_00: Does the lack of details mean anything?
• 0:45
  SPEAKER_00: We don't know.
• 0:47
  SPEAKER_00: I think the market will still wait for corn news.
• 0:50
  SPEAKER_00: It has been widely discussed that China had some 30 million tons of poor quality corn due to some late season flooding last fall.
• 1:00
  SPEAKER_00: There are also reports out of China that their industrial usage of corn is increased, increasing quite rapidly.
• 1:08
  SPEAKER_00: At some point, they may want to import more corn.
• 1:11
  SPEAKER_00: So maybe that would be an easy concession for China to make.
• 1:16
  SPEAKER_00: I guess we just wait and see.
• 1:18
  SPEAKER_00: Meanwhile, data from China shows that there are large parts of not China, sorry, data from Brazil shows that there are large parts of Mato Grosso that had gone over 30 days with zero rainfall.
• 1:31
  SPEAKER_00: That is right in the middle of their grain field.
• 1:33
  SPEAKER_00: There's little question in my mind that we are doing significant damage to that second corn crop.
• 1:38
  SPEAKER_00: As of yesterday, interior corn prices in Brazil were so high that it will limit corn shipments to the ports.
• 1:47
  SPEAKER_00: Right now, it does not look like corn export flows from Brazil will be anywhere close to what we have seen in recent years.
• 1:54
  SPEAKER_00: And that supports U.S.
• 1:56
  SPEAKER_00: corn exports even longer.
• 1:58
  SPEAKER_00: I still believe that CBOT corn will have a limited downside in coming weeks.
• 2:03
  SPEAKER_00: The path to least resistance should continue to be steadied higher.
• 2:07
  SPEAKER_00: On soybean news, soybeans sold off in the early morning hours following this statement by Secretary Basent.
• 2:14
  SPEAKER_00: And I quote, and then soybeans.
• 2:18
  SPEAKER_00: We have a very large purchase agreement from the Basan Agreement for the next three years.
• 2:24
  SPEAKER_00: So soybeans are already taken care of.
• 2:28
  SPEAKER_00: To me, that says that the early agreement, China has already promised to buy 25 million tons of U.S.
• 2:36
  SPEAKER_00: soybeans, so there's nothing more that needs to be discussed.
• 2:40
  SPEAKER_00: Well, that agreement has so many holes in it.
• 2:44
  SPEAKER_00: Are purchases to be made on a calendar year or a crop year?
• 2:48
  SPEAKER_00: Could that start in 2026 or 2027?
• 2:52
  SPEAKER_00: Um that agreement also uses the word purchases, not shipments.
• 2:59
  SPEAKER_00: Does that really commit them to actual import U.S.
• 3:02
  SPEAKER_00: soybeans this fall, like they used to do in all the years past?
• 3:07
  SPEAKER_00: No one has any idea.
• 3:09
  SPEAKER_00: The market was clearly looking for more concrete soybean details, and we did not get that this morning.
• 3:16
  SPEAKER_00: Thus, soybeans are down 27 cents.
• 3:20
  SPEAKER_00: Um and then as a side note, there's the fact that China has a very long history of not honoring signed agreements.
• 3:29
  SPEAKER_00: We do know that China is currently buying a mountain of soybeans from Brazil and Argentina.
• 3:34
  SPEAKER_00: And then yesterday, how convenient, the ag minister in China released a report stating that their hog industry is shrinking and soybean imports the next few years could decline.
• 3:46
  SPEAKER_00: You gotta wonder, is that their get out of jail free card?
• 3:51
  SPEAKER_00: At some point down the road, will they argue that the this current agreement that was signed in October allows them to back away if they have no need for more soybeans?
• 4:03
  SPEAKER_00: We don't know, but we wouldn't be shocked.
• 4:07
  SPEAKER_00: Uh at the bottom of page one, you'll see I have a uh table that shows the committed agreement, uh committed amounts uh for China, but that may be worthless as far as we know.
• 4:20
  SPEAKER_00: Um moving on to weather.
• 4:22
  SPEAKER_00: Looks like the next several days uh you've got a decent system working its way across uh the northern half of the Corn Belt.
• 4:29
  SPEAKER_00: Uh, and then in the 6 to 10, we get back to some wet flows from Texas, uh southern Oklahoma, across uh Louisiana, Arkansas, Mississippi, Tennessee.
• 4:41
  SPEAKER_00: That area could use the rain, uh, so that'll be welcome.
• 4:45
  SPEAKER_00: And then I've got a 10 day precip map for Brazil, and it continues to show Mato Grosso and Goyas having little to no precip in the next 10 days.
• 4:57
  SPEAKER_00: There is no doubt we are hurting that crop.
• 5:00
  SPEAKER_00: This is not good news for that crop.
• 5:02
  SPEAKER_00: Thanks for listening.
• 5:03
  SPEAKER_00: That's all for today.
• 5:04
  SPEAKER_00: We'll talk to you tomorrow.