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Daily Market Podcast Jun 10 · 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, June 10th.
• 0:07
  SPEAKER_00: Before we get started this morning, I just want to make sure that everybody saw the corn report that I sent out late yesterday afternoon on what could be the potential impacts if China does come in and buy U.S.
• 0:21
  SPEAKER_00: corn as part of this$17 billion deal.
• 0:24
  SPEAKER_00: I'm absolutely convinced they are going to do it.
• 0:26
  SPEAKER_00: Timing is just the ultimate question.
• 0:28
  SPEAKER_00: So anyway, if you didn't see that, please go take a look at that.
• 0:33
  SPEAKER_00: I plan on having something out on soybeans uh today, uh, but the big bull story would be much more related to corn than it would be soybeans.
• 0:42
  SPEAKER_00: Uh anyway, let's get back to the present.
• 0:45
  SPEAKER_00: Uh walking in this morning, December corn is up four and a half at 449 and three quarters.
• 0:50
  SPEAKER_00: November beans are up five at 11.37.
• 0:53
  SPEAKER_00: July crude has been all over the board this morning.
• 0:56
  SPEAKER_00: It's up 160 right now at 89.80.
• 0:59
  SPEAKER_00: As for corn news this morning, U.S.
• 1:02
  SPEAKER_00: farmer selling has really backed off on this break in corn prices.
• 1:05
  SPEAKER_00: Uh CBOT corn had made lower lows 10 days in a row, uh, but yesterday it finally did not.
• 1:13
  SPEAKER_00: Speculators have sold out of the vast majority of their longs, so maybe now that downside pressure is behind us.
• 1:21
  SPEAKER_00: But we still need some type of bullish catalyst to give us much of a rally from here.
• 1:26
  SPEAKER_00: U.S.
• 1:26
  SPEAKER_00: for weather uh U.S.
• 1:28
  SPEAKER_00: weather, sorry, remains mostly non-threatening.
• 1:31
  SPEAKER_00: U.S.
• 1:31
  SPEAKER_00: corn export demand remains super strong.
• 1:35
  SPEAKER_00: Uh to the right, uh, in the report this morning, I have current fob prices uh out of the largest four exporters, U.S., Brazil, Argentina, Ukraine.
• 1:45
  SPEAKER_00: Uh, and uh Argentina is the cheapest by uh about what 13 cents, a little bit cheaper than the U.S.
• 1:54
  SPEAKER_00: Gulf.
• 1:55
  SPEAKER_00: Um, Brazil and Ukraine are not even close to being in the game.
• 2:00
  SPEAKER_00: Uh, corn basis out of the PNW is cheap enough where we're still getting some Asian export demand there.
• 2:07
  SPEAKER_00: So uh if you look at the grand scheme of things, corn exports from the top four exporters have been record large east of the last three months.
• 2:18
  SPEAKER_00: Matter of fact, if you total up the last three months, March, April, May, corn export volume was up a whopping 21% from a year ago.
• 2:27
  SPEAKER_00: And each month was independently a record month.
• 2:31
  SPEAKER_00: So global corn demand is amazing, and the outlook for U.S.
• 2:37
  SPEAKER_00: corn exports remains super, super strong.
• 2:40
  SPEAKER_00: And along those lines, I've got a map on page two today that's worth taking a look at.
• 2:46
  SPEAKER_00: Um, EU corn area is the smallest that it's been in over 10 years, planted area this year, and they start off the growing season hot, dry, particularly Spain and France.
• 2:58
  SPEAKER_00: So it's just not good for their corn outlook as far as production goes, which eventually means corn import demand from Europe remains super good.
• 3:08
  SPEAKER_00: So uh as for CBOT corn, I lean towards a steady market for now.
• 3:14
  SPEAKER_00: Uh the funds are mostly out, and but again, we don't have a bullish catalyst.
• 3:20
  SPEAKER_00: If and when we have any type of U.S.
• 3:22
  SPEAKER_00: crop issue, even the smallest issue, or China shows up, or we get some indicator that they're gonna show up, then CBOT corn just races higher.
• 3:34
  SPEAKER_00: Longer term, I remain bullish uh CBOT corn.
• 3:37
  SPEAKER_00: As for soybean news, we feel like we're just have random time periods when speculators are selling CBOT corn and or beans are being knee-jerked brown by whatever crude oil is doing.
• 3:51
  SPEAKER_00: The point is that there's really no big story in beans today that's driving the market one way or the other.
• 3:56
  SPEAKER_00: U.S.
• 3:56
  SPEAKER_00: crops are okay, export demand is not so good, there's plenty of beans in South America, and there's no new news on China.
• 4:04
  SPEAKER_00: So it allows the market just to bounce around erratically looking for a direction.
• 4:10
  SPEAKER_00: I do find it very interesting that China has really backed off buying soybeans from both Brazil and Argentina in recent weeks.
• 4:17
  SPEAKER_00: So, what does that mean?
• 4:19
  SPEAKER_00: Does that mean their import demand is slowing down?
• 4:22
  SPEAKER_00: My vote is no.
• 4:23
  SPEAKER_00: Chinese crush rates, uh, their weekly crush rates are super, super strong.
• 4:28
  SPEAKER_00: Does that mean that their next move is to buy more U.S.
• 4:31
  SPEAKER_00: beans, or is it just simply China playing games with South American exporters to get basis levels cheaper?
• 4:37
  SPEAKER_00: Who knows?
• 4:38
  SPEAKER_00: Time will tell.
• 4:39
  SPEAKER_00: There is some talk, and again, this is just market talk, that China's close to eliminating import duties on U.S.
• 4:47
  SPEAKER_00: grains.
• 4:48
  SPEAKER_00: Again, the market is going to look for any signal that here comes China, you know.
• 4:54
  SPEAKER_00: So, again, who knows?
• 4:56
  SPEAKER_00: Um, but we all need to be on the lookout for that.
• 4:59
  SPEAKER_00: But until then, the market bounces around looking for direction until we either get some light corn, either some crop issue in the U.S.
• 5:07
  SPEAKER_00: or some sign that China is in for U.S.
• 5:11
  SPEAKER_00: beans.
• 5:12
  SPEAKER_00: Um, weather in the U.S., we've got the center of the country, continues to get good rains the next several days.
• 5:20
  SPEAKER_00: And then we've got another rain uh bout of heavy rains coming across uh the mid-south, Louisiana, Mississippi, Alabama, parts of Georgia are gonna have two to three inch rains, general rains, um, in the six to ten day time period.
• 5:38
  SPEAKER_00: Um also on page two, and I mentioned this earlier, I've got some uh charts uh and maps on European corn.
• 5:47
  SPEAKER_00: They continue to have really warm temperatures, uh, and Spain and France particularly have extremely limited rainfall.
• 5:57
  SPEAKER_00: This is just not good for their uh their corn crop over there.
• 6:00
  SPEAKER_00: So, anyway, that's it for today.
• 6:03
  SPEAKER_00: Uh again, I uh I did mention I'm gonna try to have a report out on if on soybeans, what does it mean if and when China comes in here buying beans?
• 6:11
  SPEAKER_00: Not nearly as boilish for corn, but uh we'll take a look at that this afternoon.
• 6:15
  SPEAKER_00: That's it for today.
• 6:16
  SPEAKER_00: Y'all have a good day.
• 6:17
  SPEAKER_00: We'll be back tomorrow.