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Transcript

Daily Market Podcast Sep 10 · 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 Thursday, September 10th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is up 5 cents at 5.32 and 3 quarters.
• 0:12
  SPEAKER_00: November soybeans are up 9.25 at 13, 18 and a half.
• 0:17
  SPEAKER_00: December meal is up$1.90 at$3.53.30.
• 0:21
  SPEAKER_00: October crude is up again, up$280 at$98.90.
• 0:26
  SPEAKER_00: Walking in this morning.
• 0:28
  SPEAKER_00: As far as corn news, um, today I want to spend some time reviewing where we are, where this corn market is before this massive USD report tomorrow morning.
• 0:39
  SPEAKER_00: Global demand is still record-large.
• 0:41
  SPEAKER_00: Corn exports out of Russia are basically non-existent.
• 0:44
  SPEAKER_00: The only corn flowing out of Ukraine is overland, and that's in very small amounts.
• 0:49
  SPEAKER_00: Exports from Brazil are down quite a bit due in large part to the enormous corn grind for ethanol.
• 0:56
  SPEAKER_00: Argentina continues to pump out record corn exports, but they are basically making up for the loss in the previous three countries.
• 1:05
  SPEAKER_00: And U.S.
• 1:05
  SPEAKER_00: corn exports continue to be record large, at least for now.
• 1:09
  SPEAKER_00: But our export slow export flows should be slowing down.
• 1:14
  SPEAKER_00: With U.S.
• 1:14
  SPEAKER_00: corn now so expensive versus South America, we should see our sales pace, the export sales pace decline.
• 1:21
  SPEAKER_00: As for domestic use, U.S.
• 1:24
  SPEAKER_00: ethanol marches are still good, so production remains big.
• 1:27
  SPEAKER_00: Cattle production remains slightly down from a year ago.
• 1:31
  SPEAKER_00: Hog production is flat.
• 1:32
  SPEAKER_00: Chicken production remains up a decent amount.
• 1:34
  SPEAKER_00: So net net U.S.
• 1:36
  SPEAKER_00: meat production is still slightly bigger than a year ago.
• 1:40
  SPEAKER_00: So overall U.S.
• 1:41
  SPEAKER_00: corn demand remains very strong with a giant question mark on upcoming export demand.
• 1:48
  SPEAKER_00: That is what makes this U.S.
• 1:50
  SPEAKER_00: uh this USDA crop report uh tomorrow morning so critical.
• 1:55
  SPEAKER_00: We can live with a yield of 179 or 180 bushels per acre.
• 2:00
  SPEAKER_00: But if the yield is lower, then we end up with very tight stocks in the U.S.
• 2:05
  SPEAKER_00: And if we have yields somewhere in the neighborhood of 175, 176, stocks can be so tight that somebody has too ration demand, somebody has to slow down.
• 2:18
  SPEAKER_00: Um the range of yield guesses for tomorrow's report is very wide, and that makes for a lot of volatility tomorrow morning when this report is released at 11 o'clock central time.
• 2:31
  SPEAKER_00: And CBOT corn is just buying time until this report.
• 2:35
  SPEAKER_00: We were down four yesterday, we're up five today, we're going nowhere.
• 2:38
  SPEAKER_00: The market is waiting on this report.
• 2:42
  SPEAKER_00: As far as soybeans go, uh, as review of soybeans, that market is slightly different than corn.
• 2:50
  SPEAKER_00: Export demand was increasing a month ago when we were at much, much lower prices.
• 2:56
  SPEAKER_00: Today, when you calculate landed values with very expensive fuel and high freight rates, soybeans from both Brazil and Argentina are cheaper than U.S.
• 3:07
  SPEAKER_00: beans delivered to the two big markets, which is Europe and Asia.
• 3:12
  SPEAKER_00: So export demand today is hugely tied to political agreement between Trump and Z.
• 3:20
  SPEAKER_00: And it's anybody's guess how that one goes.
• 3:24
  SPEAKER_00: U.S.
• 3:24
  SPEAKER_00: crush rates remain record large and will continue to get slow, uh get slowly larger as several plants are still expanding capacity.
• 3:36
  SPEAKER_00: That brings us to the U.S.
• 3:38
  SPEAKER_00: crop.
• 3:39
  SPEAKER_00: With soybean area up so much this year, if we have a 52 or 53 bushel an acre yield in the U.S., then we have plenty of soybeans.
• 3:49
  SPEAKER_00: Under 52 gets to be a problem.
• 3:52
  SPEAKER_00: I highly doubt that USDA comes out with a yield under 52 bushels tomorrow morning.
• 3:57
  SPEAKER_00: So that leaves the market in a very strange place.
• 4:00
  SPEAKER_00: Speculators have massively plowed in in new long positions.
• 4:04
  SPEAKER_00: We've got this Trump Z meeting in two weeks at the White House, and there are varying opinions on finishing weather for this U.S.
• 4:12
  SPEAKER_00: swimming crop.
• 4:13
  SPEAKER_00: The summary here, we have likely run soybeans high enough for now.
• 4:18
  SPEAKER_00: The market has placed huge bets, and we need some really bullish news to keep us going higher from here.
• 4:24
  SPEAKER_00: And I don't think USDA is going to give us that bullish news tomorrow.
• 4:29
  SPEAKER_00: I've got charts on the bottom of page one uh showing the range of guesses for ending stocks on the report tomorrow.
• 4:40
  SPEAKER_00: And you can see it's it's a pretty wide range, especially for corn.
• 4:46
  SPEAKER_00: So um as far as weather goes, weather seems to be getting better.
• 4:52
  SPEAKER_00: Um, we're getting more rainfall coming across the central part of the corn belt, um, and that will certainly help soybeans.
• 5:02
  SPEAKER_00: Um, that'll help the finishing weather there.
• 5:05
  SPEAKER_00: We got a system coming across the next three or four days, then we've got another one next week.
• 5:09
  SPEAKER_00: And even if you look at longer term, um, even out to two weeks, it looks like the most of the corn m is going to be in the normal to above normal precip range going forward.
• 5:25
  SPEAKER_00: So that should help soybeans um as they're finishing up their growing season.
• 5:31
  SPEAKER_00: That's it for today.
• 5:32
  SPEAKER_00: Thanks for listening.
• 5:33
  SPEAKER_00: We'll be back tomorrow.