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Daily Market Podcast Oct 26 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:00
  SPEAKER_00: This is Chris Myers with M6 Capital Management with our daily market letter on Monday morning, October 26th.
• 0:06
  SPEAKER_00: I hope everybody got my email last night that I was going to be a little bit delayed this morning.
• 0:10
  SPEAKER_00: It was unavoidable and I apologize.
• 0:12
  SPEAKER_00: Walking in this morning, December corn is down four and a half at 452.
• 0:16
  SPEAKER_00: November beans are down 21.5 at 1235 and a quarter.
• 0:20
  SPEAKER_00: December meal is down 650, and December crude is down$1.50 at$10180.
• 0:25
  SPEAKER_00: As far as corn news, um, I've got seasonal charts today for corn and beans at the bottom of page one.
• 0:32
  SPEAKER_00: And as you can see on the chart, typically December corn makes a harvest time low in late August, early September, and then trades steadied higher through the end of the year.
• 0:41
  SPEAKER_00: Typically, I would argue that seasonal patterns are the dominant feature in green markets.
• 0:47
  SPEAKER_00: But this year we have some overwhelming circumstances that tell us that the seasonal harvest time lows that should be made in late August or September have not been made yet.
• 0:58
  SPEAKER_00: Instead, the CBOT corn market is in a phase of change.
• 1:03
  SPEAKER_00: They are changing from expectations of U.S.
• 1:06
  SPEAKER_00: crop issues and massive U.S.
• 1:08
  SPEAKER_00: export demand to big, a big U.S.
• 1:12
  SPEAKER_00: crop, um, maybe even huge, and lacking U.S.
• 1:16
  SPEAKER_00: export demand.
• 1:18
  SPEAKER_00: And that is uh overwhelming any seasonal tendencies right now.
• 1:23
  SPEAKER_00: Also, uh, this is a change.
• 1:25
  SPEAKER_00: The crop outlook, and we've talked about this, the crop outlook is spectacular in South America, and not just the crop being planted right now, uh, but also for Brazil's second corn crop, which is planted after soybean harvest.
• 1:38
  SPEAKER_00: Soybean planting progress in Mato Grosso, Brazil, is record fast.
• 1:42
  SPEAKER_00: So right now, we can all assume that second crop corn planting, after those that early bean crop is harvested, should not have any issues.
• 1:51
  SPEAKER_00: So today, it certainly looks like we have massive global corn supplies for a long, long time to come.
• 1:59
  SPEAKER_00: As for CBOT corn, the path to least resistance still looks to be lower, both in the near term and longer term.
• 2:08
  SPEAKER_00: As far as soybean news this morning, I have a seasonal chart for soybeans on the bottom of page one.
• 2:13
  SPEAKER_00: Also, typically CBOT soybeans make a seasonal low in August and then again in October, and then trade steady to higher until February, March time period.
• 2:24
  SPEAKER_00: And typically that's when we feel like we know more about the size of the South American crops.
• 2:30
  SPEAKER_00: Well, this year we do not need seem to be following that path whatsoever.
• 2:34
  SPEAKER_00: We have such massive supplies of soybeans in both Brazil and also in Argentina and Brazil and South America.
• 2:43
  SPEAKER_00: And crop prospects look like they're gonna be massive down there.
• 2:47
  SPEAKER_00: And this year it looks like we're just throwing seasonals straight out the window.
• 2:51
  SPEAKER_00: Also, this morning, we have an extra influence coming in, and that's the presidential elections in Brazil.
• 2:58
  SPEAKER_00: Yesterday, Lula won the election, which Bolsonaro was expected to win going home on Friday, and Brazil's stock market is expected to be down hard this morning, and Brazilia's currency has already lost 9% this morning.
• 3:13
  SPEAKER_00: So, Brazilian, what that means is Brazilian farmers get 9% more reales for their soybeans this morning.
• 3:20
  SPEAKER_00: This is expected to bring a lot of farmer selling.
• 3:24
  SPEAKER_00: So CBOT soybeans are down 20 cents.
• 3:28
  SPEAKER_00: Uh at least well, they're down actually 24 as we're speaking right now.
• 3:33
  SPEAKER_00: But we have some very wet weather in southern Brazil.
• 3:36
  SPEAKER_00: Uh, we talked about this last week.
• 3:38
  SPEAKER_00: It's still delaying planning.
• 3:40
  SPEAKER_00: So this big sell-off that we're having in beans this morning because of the situation in Brazil, we may find some more.
• 3:47
  SPEAKER_00: I could still contend that this will be a market.
• 3:50
  SPEAKER_00: It may break on this Brazilian moves, but we're likely going to uh chop around and trade sideways until the market gets a little bit more clarity on this planning weather in southern Brazil.
• 4:02
  SPEAKER_00: So, near term, longer term, I think we're trading sideways until we know a little bit more about Brazil.
• 4:09
  SPEAKER_00: As far as the weather goes, uh corn market this are the uh the corn belt this week looks like they're gonna be wide open for weather, particularly the Mississippi River and to the east.
• 4:20
  SPEAKER_00: Uh, and also the far northwestern corn belt, um, most of South Dakota and North Dakota should be blowing and going on harvest.
• 4:28
  SPEAKER_00: Then we've got a little bit of light scattered rains coming in next week.
• 4:32
  SPEAKER_00: Again, the big focus is southern Brazil.
• 4:35
  SPEAKER_00: Uh Paraná in the next 10 days has still got four plus inches of rain coming to coming at it.
• 4:42
  SPEAKER_00: And this is this is becoming a problem uh that we need to be watching.
• 4:47
  SPEAKER_00: That's it for today.
• 4:48
  SPEAKER_00: Thanks for listening.
• 4:49
  SPEAKER_00: We'll be back tomorrow.