Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Sep 22

Transcript

Daily Market Podcast Sep 22 · 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 Tuesday morning, September 22nd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down 4 cents at 5.38 and 3 quarters.
• 0:11
  SPEAKER_00: November beans are down 7 at 13.21.
• 0:15
  SPEAKER_00: December meal is down 90 cents at 367.50.
• 0:19
  SPEAKER_00: And November crude is down 230 at$90.10 a barrel.
• 0:24
  SPEAKER_00: As far as corn news this morning, CBFT greens, uh, the grain markets all rallied in units yesterday following Secretary Besent's comments about positive trade talks with China.
• 0:36
  SPEAKER_00: And that's all it took.
• 0:38
  SPEAKER_00: The market ran with the idea that China will be here to buy$17 billion worth of USA goods.
• 0:45
  SPEAKER_00: This is very much like the old Johnny Carson show, where Ed McMahon would announce, here comes Johnny.
• 0:53
  SPEAKER_00: Well, what the market heard was Scott Bissent announcing, here comes China.
• 0:59
  SPEAKER_00: But let's be honest, this is a politician being very vaguely positive.
• 1:07
  SPEAKER_00: And we really have no clue how this is going to end up later this week.
• 1:11
  SPEAKER_00: We hope we are smarter on Friday.
• 1:14
  SPEAKER_00: But that does not stop a market from shooting first and asking questions later.
• 1:19
  SPEAKER_00: But I find it very interesting that export cash markets were not firmer at all yesterday.
• 1:25
  SPEAKER_00: If China was actually coming to buy corn or wheat or anything else anytime soon, then basis at New Orleans and at the PNW would be firmer.
• 1:37
  SPEAKER_00: And yesterday, export basis was steady to lower.
• 1:41
  SPEAKER_00: So this is hugely speculators buying more and more corn futures contracts.
• 1:47
  SPEAKER_00: They bought at least 25,000 contracts yesterday.
• 1:51
  SPEAKER_00: So the record loan position just keeps getting bigger and bigger and bigger.
• 1:55
  SPEAKER_00: At some point in time, this thing's a house of cards.
• 1:58
  SPEAKER_00: Meanwhile, U.S.
• 1:59
  SPEAKER_00: corn exports last week were they were still big.
• 2:02
  SPEAKER_00: They were a massive 76 million bushels last week.
• 2:05
  SPEAKER_00: That is 30% larger than what we were doing in early September last year.
• 2:10
  SPEAKER_00: As for corn crop progress, the U.S.
• 2:12
  SPEAKER_00: corn crop is now 92% dented, 58% mature, 13% harvested.
• 2:18
  SPEAKER_00: All of those are running slightly ahead of normal.
• 2:22
  SPEAKER_00: And we have a few scattered corn yields coming in so far from farmer reports and seed company yield trials, but not a lot.
• 2:29
  SPEAKER_00: In the next one to two weeks, we should be getting a lot more yields coming in, and we'll at least have some decent indication if the corn crop is actually getting smaller or not.
• 2:41
  SPEAKER_00: As for the rest of this week, it looks like Chinese news will be the major driver, and that is flip a coin.
• 2:46
  SPEAKER_00: It's anybody's guess how that thing ends up.
• 2:49
  SPEAKER_00: As far as soybean news, obviously soybeans started off the week strong with optimism on China.
• 2:55
  SPEAKER_00: And again, we have no idea how this is going to end.
• 2:59
  SPEAKER_00: Um, I had stated, I do want to correct something here, I had stated last week that China had bought 12 million tons of U.S.
• 3:06
  SPEAKER_00: beans and they were close to fulfilling their agreement from last October.
• 3:10
  SPEAKER_00: I was wrong.
• 3:11
  SPEAKER_00: The agreement last October was 25 million tons, so China has more to go.
• 3:16
  SPEAKER_00: So that likely means if China does make an agreement to buy U.S.
• 3:22
  SPEAKER_00: eggs, then that agreement would very much lean toward other items and not include soybeans.
• 3:33
  SPEAKER_00: So, but again, we're guessing here.
• 3:36
  SPEAKER_00: As for soybean exports last week, China was 60% of the tonnage that was shipped out.
• 3:44
  SPEAKER_00: We've talked about this before.
• 3:45
  SPEAKER_00: At current high prices, U.S.
• 3:47
  SPEAKER_00: export demand is getting smaller.
• 3:49
  SPEAKER_00: It's not getting bigger.
• 3:51
  SPEAKER_00: As far as U.S.
• 3:52
  SPEAKER_00: crop progress, 62% of the soybean crop is dropping leaves, 12% is harvested.
• 3:57
  SPEAKER_00: The swimming crop is progressing ahead of normal across the states in the mid-south and western and the northwestern corn belt.
• 4:07
  SPEAKER_00: Other areas, the central corn belt and the east, are normal to maybe behind normal just a little bit.
• 4:14
  SPEAKER_00: As for the U.S.
• 4:15
  SPEAKER_00: swimming crop condition rating, I find this interesting.
• 4:19
  SPEAKER_00: Again, it was unchanged last week.
• 4:22
  SPEAKER_00: Typically, late in the season, the swimming crop rating declines.
• 4:27
  SPEAKER_00: This year, it has been unchanged for five weeks.
• 4:31
  SPEAKER_00: Historically, that has meant that the crop yield is not getting smaller.
• 4:37
  SPEAKER_00: It may not be getting bigger, but historically that means the yield is not getting smaller.
• 4:44
  SPEAKER_00: So let's just look at this thing longer term.
• 4:47
  SPEAKER_00: If the US yield is not lower and the crops in South America are okay, then come next spring, the world will once again have way too many soybeans.
• 5:00
  SPEAKER_00: So the market, obviously, today does not care about this whatsoever.
• 5:05
  SPEAKER_00: It's all about China, China, China.
• 5:07
  SPEAKER_00: But longer term, it's really beginning to look like rallies are to be sold.
• 5:13
  SPEAKER_00: I have uh at the bottom of page one, I have a chart today of U.S.
• 5:17
  SPEAKER_00: diesel prices.
• 5:18
  SPEAKER_00: The American Automobiles Association came out yesterday and said that diesel prices are currently averaging$6.51.
• 5:26
  SPEAKER_00: That is up a whopping 74% from a year ago.
• 5:32
  SPEAKER_00: This just can't keep going, obviously.
• 5:35
  SPEAKER_00: Um, as far as weather goes, we've got another round of rains coming into Nebraska and Iowa.
• 5:42
  SPEAKER_00: What looked like we were gonna start making some harvest progress in Iowa is the prospects for that are kind of backing off.
• 5:49
  SPEAKER_00: Uh, and then we follow up again next week with another round of inch one-inch rains in Kansas, Missouri, Iowa, Minnesota.
• 5:59
  SPEAKER_00: So uh we may be back in a situation where some of these western um crust plants are running slow because they just they're not getting enough new crop beans in.
• 6:10
  SPEAKER_00: Um again, I've got on the bottom of page two, I've got a 10-day forecast for precip in South America.
• 6:18
  SPEAKER_00: And we continue to highlight the two main grain areas of central Brazil and central Argentina.
• 6:25
  SPEAKER_00: They both need more rain, particularly central Brazil.
• 6:29
  SPEAKER_00: Um, again, not a major deal today, but if we're still dry two weeks from now and the forecast uh is for you know more dryness, then that's becomes a big deal very quickly.
• 6:41
  SPEAKER_00: So need to watch that one.
• 6:43
  SPEAKER_00: That's it for today.
• 6:44
  SPEAKER_00: Thanks for listening.
• 6:45
  SPEAKER_00: We'll be back tomorrow.