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Transcript

Daily Market Podcast Oct 21 · 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 Wednesday morning, October 21st.
• 0:08
  SPEAKER_00: Walking in this morning, December corn is down three and a half at 4.58 and three quarters.
• 0:12
  SPEAKER_00: November beans are down four and three quarters at twelve forty-four.
• 0:17
  SPEAKER_00: December meal is down$1.70.
• 0:20
  SPEAKER_00: And crude is back up 70 cents today.
• 0:28
  SPEAKER_00: Reminding people that we have revamped our website.
• 0:30
  SPEAKER_00: If you have anybody that's interested in our services, please point them to our website.
• 0:35
  SPEAKER_00: It describes what we do and how to contact us.
• 0:38
  SPEAKER_00: That is www.m6-capital.com.
• 0:42
  SPEAKER_00: As far as corn news this morning, uh corn prices continue to dribble lower.
• 0:46
  SPEAKER_00: End users in the U.S.
• 0:47
  SPEAKER_00: are slowly expanding coverage with declining corn prices and higher fuel prices.
• 0:52
  SPEAKER_00: Ethanol margins are very good right now.
• 0:56
  SPEAKER_00: They're in the neighborhood of 70 to 80 cents per gallon of ethanol produced in Iowa and Illinois right now.
• 1:04
  SPEAKER_00: This is very good margins for this time of year.
• 1:07
  SPEAKER_00: This is keeping ethanol grind at relatively high levels.
• 1:10
  SPEAKER_00: I've got a chart of weekly ethanol production on the bottom of page one.
• 1:14
  SPEAKER_00: But U.S.
• 1:15
  SPEAKER_00: corn exports continue to disappoint.
• 1:18
  SPEAKER_00: Brazil and Argentina corn prices are getting cheaper versus the U.S.
• 1:23
  SPEAKER_00: when you compare five to five.
• 1:25
  SPEAKER_00: This is keeping U.S.
• 1:26
  SPEAKER_00: corn out of the export picture and it keeps Argentina in the driver's seat.
• 1:31
  SPEAKER_00: Argentina has by far the cheapest corn in the world right now.
• 1:35
  SPEAKER_00: As for CBFT futures, speculators continue to sell day after day, getting out of their massive long position.
• 1:42
  SPEAKER_00: We believe that the specs have sold some somewhere in the neighborhood of 30,000 contracts so far this week, but they still have a long position around 200,000.
• 1:54
  SPEAKER_00: So this selling could go on for quite a while.
• 1:57
  SPEAKER_00: And this is right in the middle of U.S.
• 1:59
  SPEAKER_00: corn harvest and the associated farmer selling that you get straight off the combine also.
• 2:06
  SPEAKER_00: In the near term, upside for corn remains limited.
• 2:09
  SPEAKER_00: As long as crops in South America are decent, we believe that longer term CBOT corn drifts lower and lower, and we eventually see March corn somewhere in the neighborhood of 425 or maybe even lower than that.
• 2:23
  SPEAKER_00: As far as soybean news goes, the last four trading sessions, CBOT soybeans have slid lower and lower.
• 2:31
  SPEAKER_00: This is tied to a break in meal prices.
• 2:34
  SPEAKER_00: We contend that crush margins are still too high.
• 2:37
  SPEAKER_00: With high crush margins, that is supportive to soybean prices.
• 2:41
  SPEAKER_00: We need meal breaking more to keep soybean prices moving lower.
• 2:45
  SPEAKER_00: With so many beans harvested in the U.S., the crush rate has picked up and we're seeing cash meal values start to weaken.
• 2:52
  SPEAKER_00: But we have some opposing forces here.
• 2:56
  SPEAKER_00: In Brazil, there are growing concerns about this wet weather, and particularly in the states of Paraná and Montgrosso do Sul, slowing down their planting pace.
• 3:06
  SPEAKER_00: Soilbean planting so far has been decent, but planting this week has been running super slow in these areas.
• 3:13
  SPEAKER_00: The weather forecasts call for continued heavy rains through at least middle of next week.
• 3:19
  SPEAKER_00: We've all seen how fast farmers can plant.
• 3:22
  SPEAKER_00: So today this is not really a problem yet, but the market is paying attention.
• 3:27
  SPEAKER_00: Also in Brazil, their soybean prices this week have firmed up, and now they're back above the prices of the U.S.
• 3:35
  SPEAKER_00: Gulf.
• 3:35
  SPEAKER_00: Of the big three, Argentina is still the cheapest, but with prices rising in Brazil, maybe we can start to see U.S.
• 3:42
  SPEAKER_00: export business start to pick back up some.
• 3:44
  SPEAKER_00: So the soybean market has several port forces pulling on it right now.
• 3:49
  SPEAKER_00: Number one, cashmere is getting cheaper, that's bearish.
• 3:53
  SPEAKER_00: Number two, you got potential planning issues in Brazil, that's maybe supportive.
• 3:58
  SPEAKER_00: And you got better U.S.
• 3:59
  SPEAKER_00: export prospects, which is supportive prices.
• 4:02
  SPEAKER_00: Maybe we see prices continue to slide a little bit lower, but it is far easier this morning to argue that CBOT prices, uh soybean prices just chop around and lack direction here in the near term until we get a little bit of clarity on what's going on in Brazil.
• 4:18
  SPEAKER_00: As far as weather goes, we pretty much got wide open weather from the Mississippi River east for the next 10 days.
• 4:29
  SPEAKER_00: Um you know, you do have this system in the plains that uh gets up into the Western Corn Belt next week, but especially this weekend, uh we should see Harvest just blowing it going.
• 4:43
  SPEAKER_00: Um Brazil is the focus, obviously.
• 4:46
  SPEAKER_00: Um, and on page two, you can see just a bullseye right on Paraná and parts of Paraguay and Mato Grosso do Sul uh getting four to five inches of rain um this week into the weekend, and then continued light rains next week.
• 5:05
  SPEAKER_00: So this is going to be a focus area that the market's gonna pay attention to.
• 5:11
  SPEAKER_00: That's it for today.
• 5:12
  SPEAKER_00: Thanks for listening.
• 5:13
  SPEAKER_00: We'll be back tomorrow.