Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Aug 14

Transcript

Daily Market Podcast Aug 14 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Friday, August 14th.
• 0:08
  SPEAKER_00: Walking in this morning, December corn is up four and a half at 476.5.
• 0:14
  SPEAKER_00: November soybeans are up six at eleven eighty-eight and a quarter.
• 0:18
  SPEAKER_00: December meal is up$320 at$317.20.
• 0:22
  SPEAKER_00: And September crude oil is up 20 cents at$81.50.
• 0:27
  SPEAKER_00: As far as corn news this morning, CBOT grain markets all took a breather yesterday after a big up on Wednesday.
• 0:34
  SPEAKER_00: Mid-morning yesterday, it was reported that Ukraine had proposed a ceasefire on all civilian vessels in the Black Sea.
• 0:44
  SPEAKER_00: They had proposed that to Russia.
• 0:46
  SPEAKER_00: That set wheat back 20 cents in a heartbeat, and corn followed.
• 0:51
  SPEAKER_00: Meanwhile, corn estimates in Argentina continue to grow, and the corn crop in Europe continues to get slammed by hot, dry weather.
• 1:00
  SPEAKER_00: Global corn demand remains super, super strong, and it looks like it's mostly U.S.
• 1:05
  SPEAKER_00: and Argentina getting the bulk of that business.
• 1:08
  SPEAKER_00: I've got a chart at the bottom of page one that is basically the exports, corn exports from the top five exporters.
• 1:18
  SPEAKER_00: And as you can see, global corn export demand is massive.
• 1:23
  SPEAKER_00: For the last five months have each been record large.
• 1:27
  SPEAKER_00: And Europe is hardly even buying any corn yet, but that's coming.
• 1:31
  SPEAKER_00: And we still believe that China will buy U.S.
• 1:33
  SPEAKER_00: corn.
• 1:34
  SPEAKER_00: We just don't know when.
• 1:46
  SPEAKER_00: Does that spur China to buy U.S.
• 1:48
  SPEAKER_00: corn?
• 1:49
  SPEAKER_00: Not sure.
• 1:50
  SPEAKER_00: Wouldn't be uncommon.
• 1:52
  SPEAKER_00: But with USDA's forecast for such tight corn stocks, we cannot afford any more corn export business.
• 2:01
  SPEAKER_00: If, when more export business shows up, CBO corn could easily trade much higher.
• 2:08
  SPEAKER_00: Also, there were multiple groups out looking at crops in the corn belt in the next week or so.
• 2:15
  SPEAKER_00: Some right now, some start um early next week.
• 2:18
  SPEAKER_00: Crop scouts that we have talked to mentioned that there are stalks with no corn ears, especially in the western states, and there have been multiple mentions of small ears with quite a bit of tip back.
• 2:31
  SPEAKER_00: We should know more in the coming days, but all each of those things point to smaller yields, and that makes CBOT corn even more bullish.
• 2:41
  SPEAKER_00: As far as soybean news, uh China continues to buy U.S.
• 2:45
  SPEAKER_00: beans every day.
• 2:46
  SPEAKER_00: Weekly soybean export sales continue to be eat continue to be decent, even to locations other than China.
• 2:54
  SPEAKER_00: Export meal sales are okay, not great.
• 2:57
  SPEAKER_00: We'll get an update on U.S.
• 3:00
  SPEAKER_00: July crush, soybean crush on Monday.
• 3:03
  SPEAKER_00: That is expected to be another record crush month for the 16th straight month in a row.
• 3:11
  SPEAKER_00: We should see domestic meal offers uh continue to get cheaper as we get closer to U.S.
• 3:16
  SPEAKER_00: soybean harvest and a record big supply of beans available to crush.
• 3:21
  SPEAKER_00: As for bean oil, U.S.
• 3:23
  SPEAKER_00: biodiesel and renewable diesel producers both have very good margins.
• 3:28
  SPEAKER_00: But we are importing a mountain of cheap veg oils and used cooking oils as feedstock.
• 3:34
  SPEAKER_00: So U.S.
• 3:36
  SPEAKER_00: soybean oil demand is okay, but not quite as strong as it could be due to all these imports coming in for feedstock.
• 3:44
  SPEAKER_00: Also, on September 1, EPA is supposed to announce results of some more waivers.
• 3:51
  SPEAKER_00: So with crude oil jerking back and forth and these waivers coming, we could easily see swabbean oil prices continue to bounce around like a rubber ball on a broken sidewalk.
• 4:03
  unknown: U.S.
• 4:04
  SPEAKER_00: crutch margins remain huge.
• 4:06
  SPEAKER_00: We see CBOT soybeans being well supported for now, especially as being as we've got so much of this growing season left to go until we get further down the road and see what this crop really is.
• 4:18
  SPEAKER_00: Um please I highly recommend people to take a look at the chart on the bottom of page one that is uh monthly corn exports.
• 4:27
  SPEAKER_00: They just remain massive.
• 4:29
  SPEAKER_00: Move on to cattle comments this morning.
• 4:31
  SPEAKER_00: Um the U.S.
• 4:33
  SPEAKER_00: cash cattle market continues to sell off.
• 4:35
  SPEAKER_00: Uh in mid-June, cash cattle was trading 260.
• 4:39
  SPEAKER_00: By late July, it was down to 230.
• 4:42
  SPEAKER_00: Last week it was back up to 235.
• 4:45
  SPEAKER_00: And then cash cattle fell apart again this week, uh, making a new load for the move.
• 4:49
  SPEAKER_00: There was some 230 that traded in Nebraska and Kansas yesterday.
• 4:53
  SPEAKER_00: As part of this, part of this was speculators getting out of longs and futures.
• 4:57
  SPEAKER_00: Part of this was too many fat cattle ready to go right now, and part of this was Packers cutting kills.
• 5:05
  SPEAKER_00: Combined, we just witnessed the biggest cash decline ever in an eight-week period.
• 5:12
  SPEAKER_00: As a percentage, it was one of the largest in the last 10 years, behind only July of 2020 when COVID had so many slaughter plants shut down.
• 5:23
  SPEAKER_00: We have discussed Packers cutting kills and trying to get a margin back.
• 5:27
  SPEAKER_00: And I've got a chart on the bottom of page two showing that beef prices have seasonally bottomed and stabilized.
• 5:35
  SPEAKER_00: Seasonally beef prices tend to rally from now into September.
• 5:40
  SPEAKER_00: But with so many more imports, beef imports coming in this year, we do not see this beef rally really going very far today.
• 5:47
  SPEAKER_00: But nevertheless, Packers are still struggling to try to get a margin, my margin.
• 5:53
  SPEAKER_00: They're trying their best to get beef prices higher.
• 5:55
  SPEAKER_00: But today, they're still losing money, and their continued negative margins may keep cattle prices on the defensive in the near term.
• 6:06
  SPEAKER_00: We still have a major problem in the cattle market.
• 6:09
  SPEAKER_00: We have too many cattle in feedlots in feedlots that are very heavy and ready to go right now.
• 6:16
  SPEAKER_00: And most of those cattle are unhatched.
• 6:19
  SPEAKER_00: So any little rally that we get in futures and the feedlots will gladly let this cattle go.
• 6:26
  SPEAKER_00: I still feel like we have not yet seen the low prices in fed cattle market yet.
• 6:31
  SPEAKER_00: This very, very slow marketing pace, month after month after month, has put too much poison in the well.
• 6:38
  SPEAKER_00: Also, after the close yesterday, Tyson announced that they're closing two plants.
• 6:43
  SPEAKER_00: I've got a link on the bottom of page two to the press release.
• 6:47
  SPEAKER_00: Um, one of the plants is in Illinois and the other one's in Utah, if I remember correctly.
• 6:53
  SPEAKER_00: We've discussed this before, and this is really the only logical solution.
• 6:57
  SPEAKER_00: With U.S.
• 6:58
  SPEAKER_00: beef cow numbers so low, beef cow numbers are at the lowest levels they've been in over 50 years.
• 7:03
  SPEAKER_00: The number of cattle in the United States is not going to change anytime soon.
• 7:08
  SPEAKER_00: We're moving through a long period of too many slaughter plants, too much slaughter capacity, and at the same time, too few cattle.
• 7:18
  SPEAKER_00: These are not the last two plants that will close.
• 7:20
  SPEAKER_00: This thing is probably going to get worse before it gets better.
• 7:24
  SPEAKER_00: Moving on to weather, um, we've got a system coming across the center of the corn belt uh the next several days, uh, Iowa, uh, northern Illinois, Indiana into uh Ohio.
• 7:36
  SPEAKER_00: Following that, um kind of the same old story.
• 7:40
  SPEAKER_00: Following that system, you go back to kind of light-scattered precip.
• 7:44
  SPEAKER_00: Uh the hot temperatures that we've had in the plains have migrated south and east.
• 7:50
  SPEAKER_00: Uh, looks like most of the hot temperatures now, instead of being in the Dakota's Nebraska, it looks like they're going to be uh Kansas down to Texas and all the way over to Alabama.
• 8:01
  SPEAKER_00: Um you've got corn harvest uh ongoing in the mid-south, and that's going to dry down corn very rapidly uh the next several days.
• 8:10
  SPEAKER_00: Extended forecast, you look out into the eight to 14-day time period, and you still got above normal temperatures covering the entire country and normal to below normal precip.
• 8:22
  SPEAKER_00: I still feel like this crop could use a break in temperatures, back us off these smoking high temperatures, and we could use more precip, particularly once we get past this system going through the corn belt.
• 8:33
  SPEAKER_00: That's it for this week.
• 8:35
  SPEAKER_00: That's it for today.
• 8:36
  SPEAKER_00: Y'all have a great weekend.
• 8:38
  SPEAKER_00: Thanks for listening.
• 8:39
  SPEAKER_00: We'll be back on Monday.