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Transcript

Daily Market Podcast Oct 6 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: This is Chris Myers with AM6 Capital Management with our daily market later on Tuesday morning, October 6th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is up four and a quarter at 501.5.
• 0:10
  SPEAKER_00: November soybeans are up seven at twelve eighty-seven and three-quarters.
• 0:15
  SPEAKER_00: December meal is up five bucks this morning.
• 0:18
  SPEAKER_00: And November crude is down 220 at 87.25.
• 0:23
  SPEAKER_00: And it is interesting that this morning we've got crude oil prices that are now the lowest level since the first couple of days of September.
• 0:34
  SPEAKER_00: And quite obviously well off their highs of 101, 102 back in mid-September.
• 0:43
  SPEAKER_00: As far as U.S.
• 0:44
  SPEAKER_00: uh as far as corn news this morning, U.S.
• 0:47
  SPEAKER_00: corn harvest was 23% complete yesterday, slightly behind the 27% average.
• 0:53
  SPEAKER_00: But harvest should make uh big progress and move rapidly this week.
• 0:58
  SPEAKER_00: The weather's gonna be wide open.
• 1:00
  SPEAKER_00: Uh the corn market certainly seems to have stalled here and is quite obviously waiting on the UST report this Friday.
• 1:10
  SPEAKER_00: Some years the October crop production report is a big deal, other years, not so much.
• 1:15
  SPEAKER_00: Well, this year we have a record large spec long position, and the market is expecting that the U.S.
• 1:23
  SPEAKER_00: yield is going down a lot.
• 1:26
  SPEAKER_00: So this year, the October crop report really matters.
• 1:30
  SPEAKER_00: I contend that it will be hard for this report to be bullish.
• 1:34
  SPEAKER_00: First, uh I've got a chart at the bottom of page one showing the current speculator positions in corn or soybeans.
• 1:43
  SPEAKER_00: And it's pretty easy to see that the corn long for this time of year is by far the biggest ever by a long stretch.
• 1:54
  SPEAKER_00: And second, yield reports that we get from seed companies and from university trials do not support a big drop in the U.S.
• 2:03
  SPEAKER_00: corn yield.
• 2:05
  SPEAKER_00: We have long been in the camp.
• 2:07
  SPEAKER_00: Um, here at M6 Capital, we have long since been in the camp that the U.S.
• 2:11
  SPEAKER_00: corn yield is 175, 176.
• 2:15
  SPEAKER_00: But data we have seen the last few days is making us change that opinion.
• 2:19
  SPEAKER_00: Several weeks ago, we were headed towards a small corn yield and tight U.S.
• 2:24
  SPEAKER_00: corn stocks.
• 2:25
  SPEAKER_00: But things have changed.
• 2:27
  SPEAKER_00: Last week, USDA raised to September 1, the our beginning stocks number.
• 2:32
  SPEAKER_00: U.S.
• 2:33
  SPEAKER_00: corn export sales have fallen off hard in recent weeks.
• 2:36
  SPEAKER_00: We've talked about that.
• 2:37
  SPEAKER_00: And it now appears that the corn yield is not going to be 175, 176.
• 2:43
  SPEAKER_00: The corn yield, according to our data, may be only down a half to maybe one bushel at most from USDA's September yield of 178.5.
• 2:54
  SPEAKER_00: Those combined facts do not result in Thai corn stocks next spring and summer.
• 3:01
  SPEAKER_00: So for us to get a bullish report this Friday with this massive spec long, it's pretty easy to argue that we need to see a big drop in USDA's yield.
• 3:13
  SPEAKER_00: And data that we've seen just does not support that argument.
• 3:18
  SPEAKER_00: This market needs a supply shortage, it needs a crop problem to continue to be bullish.
• 3:24
  SPEAKER_00: So this crop report Friday becomes very important, both for the near-term and the longer term outlook for CBOT corn.
• 3:32
  SPEAKER_00: If we don't get a big drop in Friday's corn yield, it will become more and more unlikely that CBOT corn can be bullish next spring and summer.
• 3:43
  SPEAKER_00: Summary here, our outlook for CBOT corn prices is changing.
• 3:49
  SPEAKER_00: As far as soybeans go, um, the speculator position in soybeans is also shown uh in the charts there at the bottom of page one, and it is also huge for this time of year.
• 4:01
  SPEAKER_00: And like corn, it is becoming harder and harder to find bullish news to keep CBOT soybeans elevated at these high prices.
• 4:09
  SPEAKER_00: Our yield data thus far supports a U.S.
• 4:12
  SPEAKER_00: soybean yield plus or minus half a bushel from what USDA reported in uh estimated in September, which was 52.8 bushels per acre.
• 4:24
  SPEAKER_00: We have discussed that U.S.
• 4:25
  SPEAKER_00: soybeans are losing export business, and soybean planting in Brazil is actually ahead of average.
• 4:31
  SPEAKER_00: As of yesterday, 9% of the Brazilians of the Brazilian soybean crop was planted, and planning progress in the three big states of Mato Grosso, Monte Grosso, Seoul, and Parana is actually ahead of average for all three.
• 4:44
  SPEAKER_00: So if we don't have the U.S.
• 4:46
  SPEAKER_00: crop issue and we're losing a U.S.
• 4:48
  SPEAKER_00: export business, and we don't have a South American crop issue, there is no reason, zero reason, for CBOT soybeans to be above$12.
• 4:59
  SPEAKER_00: Yet here we are.
• 5:01
  SPEAKER_00: It is becoming easier and easier to see much more downside for CBOT soybeans than upside, particularly longer term if crops uh continue to be okay in South America.
• 5:15
  SPEAKER_00: As far as weather, we obviously have a wide open uh five, six days across the corn belt.
• 5:22
  SPEAKER_00: Harvest progress should make, should move rapidly uh the next four or five days.
• 5:28
  SPEAKER_00: Um and really, even next week, we have light scattered rains uh across the majority of the corn belt.
• 5:35
  SPEAKER_00: Um, South America weather is good across all of South America.
• 5:41
  SPEAKER_00: Uh seasonal rains are starting in Brazil, they've got good moisture in Argentina.
• 5:45
  SPEAKER_00: The only place that is maybe a potential problem is they're too wet in Paraná.
• 5:52
  SPEAKER_00: But planting progress is well ahead of normal in Paraná.
• 5:55
  SPEAKER_00: So if they're wet and they slow down for several days, no big deal.
• 5:59
  SPEAKER_00: Um, I've also got some on the bottom of page two, I've got some maps showing the soybean area in Brazil and the corn area in Argentina.
• 6:08
  SPEAKER_00: Those are the two crops, uh, main crops that are being planted right now, so you can kind of see what areas we need to be watching.
• 6:13
  SPEAKER_00: That's it for today.
• 6:14
  SPEAKER_00: Thanks for listening.
• 6:16
  SPEAKER_00: We will be back tomorrow.