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Transcript

Daily Market Podcast Jun 16 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning and happy Tuesday to everyone.
• 0:02
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Tuesday, June the 16th.
• 0:08
  SPEAKER_00: Walking in this morning, December corn is up a quarter at 442.
• 0:12
  SPEAKER_00: November beans are down 8.5% at 11.26.5.
• 0:17
  SPEAKER_00: And August crude is taking it on the chin again.
• 0:20
  SPEAKER_00: It's down 215 at 77.30.
• 0:24
  SPEAKER_00: As for corn news this morning, USGA's weekly crop condition ratings yesterday uh increased 1.26%, rated good to excellence.
• 0:35
  SPEAKER_00: And I've got a chart below.
• 0:37
  SPEAKER_00: You can see on the bottom of page one that this is right at the 20-year average.
• 0:43
  SPEAKER_00: So the crop is normal-ish.
• 0:47
  SPEAKER_00: Also, yesterday, SP Global, which is the old Sparks companies of the old informa group, they issued their farmer survey and they increased U.S.
• 1:00
  SPEAKER_00: corn acres 700,000 acres from what USDA published in their March intentions.
• 1:06
  SPEAKER_00: Meanwhile, U.S.
• 1:08
  SPEAKER_00: corn exports last week were 64 million bushels.
• 1:13
  SPEAKER_00: This is well above the 52 million bushel pace that we need to reach USDA's export forecast.
• 1:19
  SPEAKER_00: So the export story remains the same.
• 1:23
  SPEAKER_00: Global corn demand is huge, and U.S.
• 1:27
  SPEAKER_00: corn export demand remains record large.
• 1:30
  SPEAKER_00: I've got a table uh to the right on page one that shows export basis.
• 1:37
  SPEAKER_00: Uh you've got U.S.
• 1:38
  SPEAKER_00: Gulf at 95 cents versus Argentina at 90 cents.
• 1:43
  SPEAKER_00: Uh Argentina is a little bit cheaper, obviously.
• 1:45
  SPEAKER_00: Brazil at$1.15 and Ukraine at$1.75.
• 1:50
  SPEAKER_00: So obviously, Argentina is a little bit cheaper in the U.S., but Argentina can't do it all.
• 1:56
  SPEAKER_00: Uh US remains well below Brazil.
• 1:59
  SPEAKER_00: Uh even with Brazil's second crop harvest underway, their export prices remain very expensive.
• 2:06
  SPEAKER_00: And basically, this is accumulation of a poor crop and big ethanol demand for corn in Brazil.
• 2:13
  SPEAKER_00: So we may not see very much corn flowing, uh, export corn flowing from Brazil this summer.
• 2:18
  SPEAKER_00: Also, Ukraine at$1.75 over is way too expensive.
• 2:22
  SPEAKER_00: And with their ongoing fight with Russia, they're very unreliable.
• 2:26
  SPEAKER_00: So you can pretty much count them out for right now.
• 2:29
  SPEAKER_00: PW prices are competitive.
• 2:33
  SPEAKER_00: Uh we uh we are at least are getting some Asian business off the Pacific uh because you've got uh shorter time period and a cheaper freight rate to Asia.
• 2:45
  SPEAKER_00: So we are getting some Asian business also.
• 2:48
  SPEAKER_00: So the summary here is US export corn exports remain massive.
• 2:54
  SPEAKER_00: The crop is in good shape, planet area is getting bigger, not smaller.
• 2:59
  SPEAKER_00: So today the market limps along looking for a direction.
• 3:04
  SPEAKER_00: I still remain longer-term bullish, but we cannot rally until either China shows up or we get some kind of weather issue in the U.S.
• 3:14
  SPEAKER_00: And right now we have neither.
• 3:17
  SPEAKER_00: All right, moving on to soybeans.
• 3:19
  SPEAKER_00: Crude oil is back under pressure again this morning with this U.S.-Iran uh deal seemingly uh resolved, at least for the time being.
• 3:27
  SPEAKER_00: Uh, this is keeping soybean oil and soybeans on the defensive this morning.
• 3:31
  SPEAKER_00: The U.S.
• 3:32
  SPEAKER_00: soybean crop condition ratings increased one point yesterday to 66% rated good to excellent.
• 3:38
  SPEAKER_00: Again, like corn, this is right on the 20-year average.
• 3:43
  SPEAKER_00: Uh also yesterday, NOPA, who's a National Oil Seed Process Association, issued their monthly crush.
• 3:50
  SPEAKER_00: May soybean crush was up 8% from last year and is a record for the month of May.
• 3:58
  SPEAKER_00: But with U.S.
• 3:59
  SPEAKER_00: meal exports slowing down rapidly, this means more meal will need to find a home domestically.
• 4:04
  SPEAKER_00: As for acres, SP Global, their farmer survey increased soybean plantings also, but we are passing prevent plant dates at many places across the country, and we have quite a few states that are still planting soybeans.
• 4:21
  SPEAKER_00: So to me, U.S.
• 4:22
  SPEAKER_00: soybean acres remain a massive question mark.
• 4:26
  SPEAKER_00: The near-term outlook for soybeans could be quite erratic.
• 4:30
  SPEAKER_00: The U.S.
• 4:30
  SPEAKER_00: crop is doing good.
• 4:31
  SPEAKER_00: U.S.
• 4:32
  SPEAKER_00: soybean exports right now are stinko, suggesting that we trade sideways to lower.
• 4:38
  SPEAKER_00: But if China follows through on the 25 million ton purchase, then exports pick up and we could easily rally CBOT soybeans.
• 4:47
  SPEAKER_00: But then longer term, unless we have some major crop issue, the world has plenty of soybeans between US and South America.
• 4:54
  SPEAKER_00: And let's not forget the increase in plantings of other oil seeds around the world.
• 4:58
  SPEAKER_00: So longer term, it's hard to be bullish.
• 5:02
  SPEAKER_00: So the net effect of that is if we get a rally in soybeans uh from China coming in and buying, that's probably a rally to sell.
• 5:11
  SPEAKER_00: As far as weather goes, we continue to have decent weather uh across the U.S.
• 5:16
  SPEAKER_00: The mid-south continues uh to get uh plentiful rains, um mid-south and the center, the the heart of the Corn Belt from uh Missouri across to Illinois, Indiana area.
• 5:34
  SPEAKER_00: But there is one thing I want to highlight is uh western Kansas down into Oklahoma, Texas, Pan Atlanta area, just continues to get uh pounded with these these super hot temperatures.
• 5:48
  SPEAKER_00: Um tomorrow afternoon you're supposed to be high, seeing highs 102 to 105, 106 areas.
• 5:56
  SPEAKER_00: So, again, not good for for young growing crops uh in that area.
• 6:00
  SPEAKER_00: That's it for today.
• 6:02
  SPEAKER_00: Thanks for listening.
• 6:03
  SPEAKER_00: We'll be back tomorrow.