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Daily Market Podcast Jul 9 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: It's Thursday, July 9th.
• 0:02
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is down four and three quarters at 451 and three quarters.
• 0:12
  SPEAKER_00: November beans are down four and a quarter at 1188.
• 0:16
  SPEAKER_00: August crude is up 20 cents at 7370.
• 0:20
  SPEAKER_00: Tomorrow, USDA will issue their monthly Wisde report, the World Agricultural Supply and Demand Estimates Report at 11 o'clock a.m.
• 0:31
  SPEAKER_00: Central Time.
• 0:32
  SPEAKER_00: This is where they make uh this is a monthly numbers uh report where they make changes to global supply-demand estimates for grains, cotton, rice, um, ag products.
• 0:43
  SPEAKER_00: They will also incorporate the stocks numbers from the end of June and the acreage estimates from the end of June.
• 0:51
  SPEAKER_00: So we could have some fireworks around this report.
• 0:55
  SPEAKER_00: Um, I've got the average guesses uh on the top of page one.
• 1:00
  SPEAKER_00: Me personally, I believe that USDA will come out with smaller corn stocks than what the market is looking for.
• 1:07
  SPEAKER_00: But we'll see tomorrow.
• 1:09
  SPEAKER_00: Moving on to corn, the weather models have become less bullish.
• 1:13
  SPEAKER_00: Uh late yesterday, afternoon, and again overnight, the weather models began shifting this high pressure system back west.
• 1:21
  SPEAKER_00: Therefore, you open up the corn belt for better chances of rain and less heat, especially in day 14, 15 and beyond.
• 1:32
  SPEAKER_00: So two weeks away.
• 1:34
  SPEAKER_00: So um CBOT corn has obviously backed off.
• 1:39
  SPEAKER_00: I've put these uh couple of these weather maps on page two where you can see where the high pressure system is located next Tuesday, um, and then the Tuesday beyond that.
• 1:51
  SPEAKER_00: But let's be honest, this is weather forecast models, and they will change a hundred times before we get to the end of next week.
• 2:00
  SPEAKER_00: And as a result, we could easily see CBOT corn get knee-jerked around day after day as these weather models change.
• 2:08
  SPEAKER_00: But we do feel fairly certain that next week will be hot and dry, and USDA corn crop condition ratings are expected to go down, and that will be supportive to the market.
• 2:19
  SPEAKER_00: I continue to be longer-term bullish CBOT corn, and I think brakes should be very well supported.
• 2:26
  SPEAKER_00: Moving on to soybeans, USDA did announce 472,000 tons of U.S.
• 2:31
  SPEAKER_00: beans sold to China yesterday morning.
• 2:33
  SPEAKER_00: So somewhere in the neighborhood of eight to nine cargoes of beans, mostly September, October shipment.
• 2:40
  SPEAKER_00: But it does seem like China, I'm sorry, it does not seem like China is all in uh on this buying 25 million tons of U.S.
• 2:49
  SPEAKER_00: beans.
• 2:50
  SPEAKER_00: Contacts in South America tell us that China has also this week has also bought at least 10 cargoes of Brazilian soybeans, mostly for August shipment.
• 2:59
  SPEAKER_00: So it seems like China is buying beans from whoever is the cheapest.
• 3:04
  SPEAKER_00: They buy Brazil in August, they buy U.S.
• 3:06
  SPEAKER_00: in September, October.
• 3:08
  SPEAKER_00: So therefore, the market has backed off some.
• 3:11
  SPEAKER_00: Um as for uh the WeC report tomorrow.
• 3:16
  SPEAKER_00: I don't disagree with the average market guesses uh on any stocks, and they have plenty of beans.
• 3:23
  SPEAKER_00: With big crops coming in South America and so far an okay crop in the U.S., it becomes hard to get any stocks down much.
• 3:30
  SPEAKER_00: Therefore, it becomes hard to be bullish CBOT soybeans longer term.
• 3:35
  SPEAKER_00: Meal is obviously back off backing off uh yesterday and again this morning, following beans lower.
• 3:41
  SPEAKER_00: If China comes in and buys meal somewhat depends on the pace of China buying.
• 3:49
  SPEAKER_00: If China comes in and buys all 25 million tons of beans now and they ship them very soon, then you could have a situation where crushers have to fight for bean supplies.
• 4:01
  SPEAKER_00: But with what we see China doing, which is buying from whoever is the cheapest, which is kind of business as normal, then U.S.
• 4:10
  SPEAKER_00: crushers will have plenty of beans and no, they don't have to bid them away from the exporter, and therefore crushers will have plenty of meal to get rid of.
• 4:20
  SPEAKER_00: I still remain in the camp that CBOT soybean rallies are rallies to be sold.
• 4:27
  SPEAKER_00: I have a chart at the bottom of page one today with outstanding uh U.S.
• 4:32
  SPEAKER_00: corn export sales, and that is corn around um July 1 that has been sold but not yet shipped.
• 4:41
  SPEAKER_00: And we had big totals in 21 and 22.
• 4:45
  SPEAKER_00: If you remove China, 21-22 is uh particularly 21, is when Trump's last trade deal with China was in existence.
• 4:55
  SPEAKER_00: If you back off or subtract out the corn sold to China those years, where we're simply looking at corn sold to the rest of the world, because China hadn't bought any corn yet from the US.
• 5:09
  SPEAKER_00: So if you back those totals out, which I've done in this chart, and you're just looking at corn sold to the rest of the world, we obviously have record large corn export sales to the rest of the world as of this morning.
• 5:24
  SPEAKER_00: Uh that is, in my opinion, is yet another bullish factor uh down the road.
• 5:31
  SPEAKER_00: So looking at weather, we've obviously got a system uh coming across uh that's gonna hit Missouri, Arkansas, coming across um uh Tennessee, Kentucky, uh the next several days.
• 5:46
  SPEAKER_00: Beyond that, and particularly uh early and middle part of next week, we have very limited moisture in the Corn Belt, particularly um in uh oh, you can draw a giant circle, uh, let's say South Dakota, all the way down to Oklahoma and over to let's say Indiana, that is basically going to be bone dry next week.
• 6:13
  SPEAKER_00: Uh and then you've got temperatures starting to warm up over the weekend.
• 6:18
  SPEAKER_00: They peak middle of next week with a lot of 90s and 95s in the Western Corn Belt and the Plain States, and even several days of hundreds in parts of Nebraska and especially South Dakota.
• 6:32
  SPEAKER_00: So they'll have to battle that next week.
• 6:35
  SPEAKER_00: And then at the bottom of page two, I've got two maps showing where this high pressure system is located next Tuesday, which is basically centered over um, oh, let's say Omaha, Nebraska to Sioux Falls, South Dakota.
• 6:52
  SPEAKER_00: And then that's next Tuesday, the 14th.
• 6:56
  SPEAKER_00: And then I've got a snapshot Tuesday a week later, the 21st.
• 7:01
  SPEAKER_00: The high pressure system has um retrograded back west and it's located over the four corners area and is not nearly as strong.
• 7:10
  SPEAKER_00: So that's the models this morning.
• 7:13
  SPEAKER_00: But like I said, they'll change a hundred times before we get to the end of next week.
• 7:16
  SPEAKER_00: So, anyway, that's it for today.
• 7:19
  SPEAKER_00: Uh, thanks for listening.
• 7:20
  SPEAKER_00: We'll be back tomorrow.