Latest / M6 Capital Daily Market Podcast / Daily Market Podcast May 11

Transcript

Daily Market Podcast May 11 · 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 for Monday, May 11th.
• 0:06
  SPEAKER_00: Walking in this morning, July corn is up three cents at 474 and a quarter.
• 0:11
  SPEAKER_00: July soybeans are up 12 and 3 quarters at 1220 and three quarters.
• 0:15
  SPEAKER_00: And June crude is up 310 at 98.50.
• 0:19
  SPEAKER_00: In international news, uh, crude oil is back higher again this morning.
• 0:23
  SPEAKER_00: It seems that both the U.S.
• 0:25
  SPEAKER_00: and Iran have totally rejected the others' peace proposals.
• 0:29
  SPEAKER_00: So all energy markets, including net gas, are higher today.
• 0:33
  SPEAKER_00: Moving on to corn, U.S.
• 0:35
  SPEAKER_00: corn planning should be somewhere in the neighborhood of 60% complete today, still ahead of average.
• 0:41
  SPEAKER_00: Weather this week remains cool in the northern part of the corn belt.
• 0:44
  SPEAKER_00: Nighttime lows remain in the 40s across much of the area from Minnesota to north and central Illinois, across to Michigan, especially Wednesday, Thursday, Friday, Saturday of this week.
• 0:57
  SPEAKER_00: Otherwise, the cornbelt is mostly dry this week.
• 1:00
  SPEAKER_00: Speaking of dryness, I am still very concerned with this large area of dry soils from Louisiana to Texas and Oklahoma, and then again, also Nebraska and Iowa.
• 1:12
  SPEAKER_00: I have a map showing uh this these areas on page two of the report this morning.
• 1:18
  SPEAKER_00: Also, please see the chart at the bottom of page one.
• 1:22
  SPEAKER_00: This is the chart of June crude oil futures and July CBOT corn futures.
• 1:30
  SPEAKER_00: It is worth noting since April 1st, the correlation coefficient between these two markets is 81%.
• 1:38
  SPEAKER_00: In other words, 81% of the daily price movement of July corn is being determined by crude oil futures.
• 1:46
  SPEAKER_00: So whether we like it or not, CBOT corn is a derivative of crude oil, at least for the time being.
• 1:54
  SPEAKER_00: However, strong demand and global threats are still very strong secondary drivers to this market.
• 2:04
  SPEAKER_00: I still contend that threats to supplies of corn will keep CBOT corn well supported, at least for a while.
• 2:14
  SPEAKER_00: Also, tomorrow USDA will issue its May Wiser report.
• 2:18
  SPEAKER_00: That's the World Agricultural Supply and Demand Estimates, and they will put their first global supply-demand estimates out for the 26-27 crop year.
• 2:31
  SPEAKER_00: This is pretty typically a violent report for the markets, especially with it being USDA's first shot at uh new crop balance sheets.
• 2:41
  SPEAKER_00: I can argue that USDA should increase U.S.
• 2:45
  SPEAKER_00: corn exports and lower global production.
• 2:49
  SPEAKER_00: But it's really anybody's guess what USDA puts on the report tomorrow.
• 2:53
  SPEAKER_00: The average market guess has U.S.
• 2:56
  SPEAKER_00: ending stocks next year getting smaller.
• 2:59
  SPEAKER_00: But we will cover more of that in the report tomorrow morning before USDA issues their report.
• 3:06
  SPEAKER_00: Moving on to soybeans.
• 3:08
  SPEAKER_00: Um, President Trump is supposed to be meeting with Chinese President Z on Thursday and Friday this week, but I will not be shocked if that meeting is postponed, especially as we are still fighting with Iran.
• 3:18
  SPEAKER_00: The market is trying to guess whether Trump will push for more Chinese purchases of U.S.
• 3:23
  SPEAKER_00: soybeans or not.
• 3:25
  SPEAKER_00: We should note that China is buying a mountain of soybeans from South America right now, with very large purchases from both Brazil and Argentina.
• 3:35
  SPEAKER_00: We need to watch how big these shevements are from Argentina to China in the next several months.
• 3:40
  SPEAKER_00: That could tighten up their soybeans available for crush down the road.
• 3:45
  SPEAKER_00: Therefore, it affects their meal exports.
• 3:48
  SPEAKER_00: U.S.
• 3:48
  SPEAKER_00: planting pace is estimated to be 49 to 50% in USDA's weekly crop progress report this afternoon.
• 3:55
  SPEAKER_00: That is still several points ahead of average.
• 3:58
  SPEAKER_00: As for price outlook, CBOT uh soybeans should continue to trade steady to firm this week, especially with this Chinese meeting coming up.
• 4:08
  SPEAKER_00: Moving on to weather, uh it looks like the bulk of the cornbelt is going to be relatively dry this week.
• 4:14
  SPEAKER_00: Very light rains uh in the central and eastern part of the corn belt, but not much.
• 4:20
  SPEAKER_00: Next week uh we get decent showers moving across the cornbelt.
• 4:24
  SPEAKER_00: So, really, weather wise, it's not a bad outlook at all, other than these soils are still gonna be rather cool up north.
• 4:31
  SPEAKER_00: Uh the 6 to 10 and 8 to 14 day uh outlooks have got normal ish moisture across the moisture of the corn belt.
• 4:39
  SPEAKER_00: That's it for the day.
• 4:40
  SPEAKER_00: Thanks for listening.
• 4:41
  SPEAKER_00: We'll be back tomorrow.