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Transcript

Daily Market Podcast Oct 20 · 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 ladder on Tuesday morning, October 20th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is up a penny at 468.
• 0:11
  SPEAKER_00: November beans are up four and a half at 1258.
• 0:14
  SPEAKER_00: December meal is down 160.
• 0:17
  SPEAKER_00: And De Summer Crude is up a solid$2 back above$100 this morning.
• 0:24
  SPEAKER_00: Before we get started this morning, I want to mention we have recently revamped our website.
• 0:31
  SPEAKER_00: And I've got a link to our website on page one there.
• 0:34
  SPEAKER_00: If you know anyone who's interested in our services, please point them to our website.
• 0:39
  SPEAKER_00: It describes what we do and how to contact us.
• 0:43
  SPEAKER_00: And that is www.m6-capital.com.
• 0:48
  SPEAKER_00: As far as corn news this morning, U.S.
• 0:50
  SPEAKER_00: corn harvest is 44% complete versus an average of 52%.
• 0:55
  SPEAKER_00: It seems that farmers have opted to go after beans and leave corn in the field.
• 0:59
  SPEAKER_00: Soybean harvest advanced a lot more than corn harvest did last week.
• 1:03
  SPEAKER_00: And the states that were furthest behind a normal pace are this kind of a ring of states from Nebraska, Iowa, Minnesota, and then over in the east in Michigan and Ohio.
• 1:14
  SPEAKER_00: Yield reports that we have gotten thus far continue to suggest that USDA's latest U.S.
• 1:20
  SPEAKER_00: corn yield is good.
• 1:22
  SPEAKER_00: So a big crop stays big.
• 1:26
  SPEAKER_00: CBOT corn broke through a major support level yesterday at$4.71, which was the low tick from the crop report day 11 days ago.
• 1:36
  SPEAKER_00: That triggered yet another round of speculator selling.
• 1:40
  SPEAKER_00: So today, we still have a huge corn crop in the U.S.
• 1:45
  SPEAKER_00: We have speculators who are still long and they're in the process of getting out, and a rapidly slowing U.S.
• 1:51
  SPEAKER_00: corn export demand.
• 1:52
  SPEAKER_00: Not a good picture for the near term or the long term.
• 1:56
  SPEAKER_00: And as we discussed before, there is a long, long history in the CBOT corn market that when speculators begin liquidating a big position, they go all the way to zero, which means we have a lot more selling yet to come.
• 2:10
  SPEAKER_00: And this morning, a big chunk of that spec long is losing money.
• 2:15
  SPEAKER_00: It seems that the path to least resistance is still lower, especially in the near term.
• 2:21
  SPEAKER_00: As far as soybeans, uh U.S.
• 2:23
  SPEAKER_00: soybean harvest advanced 18% last week to 64% complete.
• 2:29
  SPEAKER_00: That is only about one point behind average.
• 2:32
  SPEAKER_00: So U.S.
• 2:34
  SPEAKER_00: crushers now have plenty of beans today, and the crush rate is picking up.
• 2:39
  SPEAKER_00: This is bearish for soybean meal.
• 2:41
  SPEAKER_00: As of this morning, CBOT board crush margins are still really strong with December at$2.60 and January at$2.43.
• 2:53
  SPEAKER_00: That's a heck of a margin.
• 2:55
  SPEAKER_00: We have seen CBOT soybeans sliding lower for the last month, and we have broken around 80 cents off of our highs.
• 3:03
  SPEAKER_00: But it does become harder and harder to break beans right now if crush margins are staying so big.
• 3:11
  SPEAKER_00: The point I'm trying to make here is this we need to see a bigger break in meal, and those crush margins back off if we're going to see our next 80 cent break in beans.
• 3:25
  SPEAKER_00: Meanwhile, soybean planning in Brazil is super fast at 30% complete, a solid week ahead of average.
• 3:32
  SPEAKER_00: Planning pace is normal to ahead of normal in every state in Brazil except for Mato Grosso do Soil.
• 3:39
  SPEAKER_00: South American soybeans remains much cheaper than U.S.
• 3:42
  SPEAKER_00: U.S.
• 3:42
  SPEAKER_00: export demand is not good.
• 3:45
  SPEAKER_00: All this points to a very limited upside for CBOT soybeans.
• 3:50
  SPEAKER_00: But like I said earlier, for us to get another decent break, we need meal breaking and we need crush margins to back off.
• 3:58
  SPEAKER_00: Otherwise, in the near term, we can see soybeans just kind of chop around in lack direction here.
• 4:04
  SPEAKER_00: I've got a chart on the bottom of page one of Brazilian soybean planning progress.
• 4:09
  SPEAKER_00: You can see how they're uh well ahead of a normal pace here.
• 4:13
  SPEAKER_00: As far as U.S.
• 4:14
  SPEAKER_00: weather goes, we've pretty much got a wide open 10 days now uh for most of let's say eastern half of uh Iowa, Missouri, and all areas to the east.
• 4:29
  SPEAKER_00: So planning progress should make leaps and bounds.
• 4:33
  SPEAKER_00: Um and you still have got some decent rains in um the New Mexico, Texas, uh up into Oklahoma and Kansas areas across the next 10 days.
• 4:45
  SPEAKER_00: But the big story still remains is uh is South America, and especially weather there going forward.
• 4:53
  SPEAKER_00: And you have still got this really, really wet scenario in uh southern part of Brazil, in Paraná, southern part of Mato Grosso do Sul into Paraguay.
• 5:06
  SPEAKER_00: Um that rain system just seems to be sitting there and and will not budge.
• 5:12
  SPEAKER_00: So, beyond that, the rest of Brazil is in really good shape.
• 5:16
  SPEAKER_00: Argentina is in good shape for moisture, but we need that area is is gonna start complaining about it being too wet here pretty quickly.
• 5:23
  SPEAKER_00: So, other than that, um that's it for today.
• 5:27
  SPEAKER_00: Um thanks for listening.
• 5:29
  SPEAKER_00: We'll be back tomorrow.