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Daily Market Podcast Sep 3 · 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 morning, September 3rd.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down 14 cents at 529 and a quarter.
• 0:12
  SPEAKER_00: November soybeans are down 12 and a quarter at 12.98.
• 0:17
  SPEAKER_00: December meal is down 290.
• 0:19
  SPEAKER_00: And October crude is up$1.80 this morning at$92.90.
• 0:25
  SPEAKER_00: That's mainly on further conflict between the U.S.
• 0:29
  SPEAKER_00: and Iran.
• 0:30
  SPEAKER_00: Shocker, right?
• 0:31
  SPEAKER_00: So moving on to corn news.
• 0:40
  SPEAKER_00: We are now the most expensive in the world.
• 0:42
  SPEAKER_00: Well, that is true for every month now through January.
• 0:47
  SPEAKER_00: I've got a chart of this on the bottom of page one.
• 0:50
  SPEAKER_00: So we really have to question U.S.
• 0:55
  SPEAKER_00: export demand today, which has been stellar for months.
• 0:59
  SPEAKER_00: Matter of fact, um, August exports were a new record for the month of August and the largest exports for any month in at least five or six years.
• 1:12
  SPEAKER_00: And as for the recent rally, it was fueled by two main items uh over the last three weeks.
• 1:19
  SPEAKER_00: The rally began in mid-August with concerns for smaller U.S.
• 1:23
  SPEAKER_00: yield, which we have fully discussed.
• 1:25
  SPEAKER_00: And then in late August, the rally continued due to escalating conflict between Russia and Ukraine, and that conflict was basically stopped all Black Sea exports.
• 1:36
  SPEAKER_00: Well, this morning, both of those assumptions are in question.
• 1:40
  SPEAKER_00: First, most of the market is assuming a 175, 176, 177 type uh U.S.
• 1:48
  SPEAKER_00: coin yield.
• 1:49
  SPEAKER_00: Uh that's bushels per acre.
• 1:51
  SPEAKER_00: This is way down from USDA's recent 180.7 yield that they issued in August.
• 1:58
  SPEAKER_00: Well, yesterday afternoon, the well-name, well-known firm Allendale came out with their estimate of the U.S.
• 2:04
  SPEAKER_00: coin yield at 178.7.
• 2:09
  SPEAKER_00: And history would tell us that they tend to be low.
• 2:12
  SPEAKER_00: In 13 of the last 15 years, their September estimate is below USDA.
• 2:18
  SPEAKER_00: This would suggest USDA comes out in September on Friday of next week, around 179-180.
• 2:26
  SPEAKER_00: That is way above what the market is looking for.
• 2:31
  SPEAKER_00: Also, overnight, Putin announced that there may be a chance for a peace agreement to end the war in with Ukraine, and that they also he also stated that they are in contact with officials in Ukraine.
• 2:46
  SPEAKER_00: So to be honest with you, he probably got short wheat and short corn before he made that announcement.
• 2:53
  SPEAKER_00: No, I I obviously just made that up, but I wouldn't be shocked.
• 2:56
  SPEAKER_00: We've known the Chinese have done that for years.
• 2:59
  SPEAKER_00: Um so as we stated yesterday, we remain very bullish corn longer term, like next spring and next summer.
• 3:11
  SPEAKER_00: But right here, right now, with harvest right in front of us, we have pushed this market way too high.
• 3:18
  SPEAKER_00: And we would not be surprised if the market sets back some in coming weeks.
• 3:22
  SPEAKER_00: And matter of fact, this morning, the car market is down 14 and wheat is down 30.
• 3:28
  SPEAKER_00: So we've already gotten a pretty decent head start on that.
• 3:32
  SPEAKER_00: As far as soybeans go, um, Allendale crop estimate for soybeans is basically unchanged from what USDA estimated in August.
• 3:42
  SPEAKER_00: That flies in the face of the market's fears of a this week of a smaller U.S.
• 3:48
  SPEAKER_00: yield.
• 3:49
  SPEAKER_00: So, like corn, soybeans are down 12 cents this morning.
• 3:53
  SPEAKER_00: Also, like corn on this rally, U.S.
• 3:56
  SPEAKER_00: Gulf soybeans have priced themselves out of the export market.
• 3:59
  SPEAKER_00: As of this morning, Argentine soybeans are much, much cheaper than U.S.
• 4:06
  SPEAKER_00: soybeans for months and months and months.
• 4:09
  SPEAKER_00: And Argentina just harvested the largest bean crop on record.
• 4:13
  SPEAKER_00: So this morning the market is questioning export demand, and the market has also told that the U.S.
• 4:21
  SPEAKER_00: crop may actually not be smaller.
• 4:24
  SPEAKER_00: So I'll be honest, I really never expected CBOT soybeans to rally this high to begin with, not right now.
• 4:32
  SPEAKER_00: So on this setback, we may be in for a decent little setback in beans.
• 4:38
  SPEAKER_00: I would not be surprised.
• 4:40
  SPEAKER_00: Moving on to weather, um, we kind of continue the same pattern.
• 4:45
  SPEAKER_00: You've got a line of storms that uh goes over the top of the corn belt, and this would be in mainly Minnesota, parts of Wisconsin and Michigan.
• 4:56
  SPEAKER_00: Areas below that basically get nothing uh for the upcoming week or maybe even 10 days, or if they're doing anything, it's very light.
• 5:05
  SPEAKER_00: And we just have some just smoking hot temperatures for several days now.
• 5:10
  SPEAKER_00: You've got Kansas, Nebraska, uh, eastern Nebraska, eastern South Dakota, western Iowa into parts of western, northwestern Missouri that are 100, 105, even some 112 degree temperatures popping up.
• 5:27
  SPEAKER_00: So there are multiple reports of corn and soybean crops maturing much faster than normal out of these areas.
• 5:37
  SPEAKER_00: And we've even talked to some people in Nebraska that tells us that uh some of their dryland corn is just looking like it's gonna be a disaster this year.
• 5:47
  SPEAKER_00: Uh, and and you know, these high temperatures are not helping anything at all.
• 5:51
  SPEAKER_00: If you look further down the road in the uh you know, two weeks out, uh, we're still looking at warm temperatures across the entire nation and you know, normal ish uh type precip levels um across the corn belt, maybe even moving back into above normal type precip.
• 6:13
  SPEAKER_00: But you have to wonder is that you know too little too late as far as precip goes?
• 6:18
  SPEAKER_00: So, anyway, that's it for today.
• 6:20
  SPEAKER_00: Thanks for listening.
• 6:21
  SPEAKER_00: We'll be back tomorrow.