Latest / M6 Capital Daily Market Podcast / Daily Market Podcast Oct 14

Transcript

Daily Market Podcast Oct 14 · 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 Wednesday morning, October 14th.
• 0:06
  SPEAKER_00: Walking in this morning, December corn is unchanged at 482 and three quarters.
• 0:10
  SPEAKER_00: November soybeans are up seven and a half at 1291.25.
• 0:14
  SPEAKER_00: December meal is up 110.
• 0:16
  SPEAKER_00: And November crude is up$1.30 at$95.40 this morning.
• 0:21
  SPEAKER_00: As far as corn news this morning, U.S.
• 0:23
  SPEAKER_00: corn harvest is 33% or was 33% complete in USDA's weekly report yesterday.
• 0:30
  SPEAKER_00: This is much slower, uh about 10% slower than what we expected.
• 0:34
  SPEAKER_00: It appears that farmers are leaving corn in the field and they're going after soybeans instead.
• 0:39
  SPEAKER_00: We continue to get more yield data from university and seed company yield trials, and the data coming in this week supports USDA's bigger corn yield that they issued last Friday.
• 0:52
  SPEAKER_00: So even though there are a lot of people doubting USDA's corn yield estimates, particularly in the plain states, it does seem that the big USDA yield is correct.
• 1:03
  SPEAKER_00: Also, for months we have talked about the very poor growing season in Europe and their drought damage, low corn yield, and small corn production.
• 1:13
  SPEAKER_00: And eventually we expect Europe to become a very large corn importer.
• 1:19
  SPEAKER_00: Well, thus far, this is not happening.
• 1:21
  SPEAKER_00: I've got a chart on the bottom of page one that shows uh their corn imports July through September into Europe, and they're just kind of average.
• 1:33
  SPEAKER_00: Uh there's nothing special about them.
• 1:35
  SPEAKER_00: Um, if you look at yield data so far in October, again, it's not impressive.
• 1:41
  SPEAKER_00: The point here is that this potentially could be one bullish factor, but as of yet, that demand, uh import demand from Europe has not shown up yet.
• 1:51
  SPEAKER_00: I continue to see very limited upside in the near term or the longer, long term for CBOT corn as long as crops are okay in South America.
• 2:02
  SPEAKER_00: CBOT corn should continue to trade steady to lower in the coming weeks and months.
• 2:09
  SPEAKER_00: As far as soybeans go, um China is their buying of U.S.
• 2:16
  SPEAKER_00: soybeans is noticeably slow.
• 2:19
  SPEAKER_00: And ironically, it does appear that China is buying more cargoes from Brazil than they're buying from the U.S.
• 2:26
  SPEAKER_00: So, like so many other trade agreements with China, it seems they say and agree to whatever's politically beneficial to them at the time, and then they go and do whatever they want, agreement or not.
• 2:38
  SPEAKER_00: Soybean crush margins remain negative in China, and South American soybeans uh are cheaper delivered China than U.S.
• 2:46
  SPEAKER_00: beans.
• 2:47
  unknown: U.S.
• 2:47
  SPEAKER_00: soybean harvest made a big jump last week from 25% to 45% complete.
• 2:53
  SPEAKER_00: We have some freezing temperatures coming to the northern states, uh, North Dakota, Wisconsin, and Michigan this weekend.
• 3:01
  SPEAKER_00: But the vast majority of those soybeans um in those states are dropping leaves.
• 3:05
  SPEAKER_00: So the freeze really should not matter and should not impact yields.
• 3:10
  SPEAKER_00: Yesterday, politics played a big role in soybean oil, yet again.
• 3:15
  SPEAKER_00: EPA announced that they will reallocate waivers issued earlier.
• 3:20
  SPEAKER_00: What does that mean?
• 3:22
  SPEAKER_00: Well, EPA has issued waivers, and this is pretty common for them to do this.
• 3:26
  SPEAKER_00: They've issued waivers to smaller refineries that may be in locations without easy access to supplies of biofuels.
• 3:37
  SPEAKER_00: Um, and those small refiners are therefore not required to blend biodiesel or renewable diesel into their diesel supplies.
• 3:46
  SPEAKER_00: But then yesterday, EPA announced that those waiver amounts will all be reallocated to larger refiners.
• 3:55
  SPEAKER_00: So net net biofuel demand in the U.S.
• 3:58
  SPEAKER_00: remains big.
• 4:00
  SPEAKER_00: And this rallied bean oil when the news came out.
• 4:03
  SPEAKER_00: Meanwhile, uh we mentioned yield data for corn.
• 4:06
  SPEAKER_00: The yield data that we collect uh from the university and seed companies um suggests that the U.S.
• 4:14
  SPEAKER_00: bean crop is even bigger than what USDA estimated last Friday.
• 4:20
  SPEAKER_00: So we have a record large supply of soybeans in the U.S., not so good export demand, and crops in South America are off to a good start.
• 4:31
  SPEAKER_00: Hard to find anything bullish for soybeans right now.
• 4:35
  SPEAKER_00: I'm still in the camp that rallies should be sold.
• 4:39
  SPEAKER_00: As far as weather goes, you've got this system that stretches from Texas up into Oklahoma, Kansas, and parts of Missouri the next several days.
• 4:49
  SPEAKER_00: After that, very limited moisture, uh light scattered rains across the cornbelt.
• 4:54
  SPEAKER_00: So the next 10 days uh northern cornbelt um and then eastern cornbelt should just be blowing and going with harvest.
• 5:04
  SPEAKER_00: Uh nothing really to slow it down.
• 5:06
  SPEAKER_00: As far as weather in South America, which we will be moving more into, focusing on that in the coming months.
• 5:13
  SPEAKER_00: Um you've got these heavy rains in Paraná the next several days, several days, and they move out.
• 5:19
  SPEAKER_00: You've got better rains that are moving into central Brazil, parts of Mato Grosso, um, Goyas, Bahia.
• 5:26
  SPEAKER_00: Those uh they're getting very their seasonal rains have started, they're getting more and more regular rains.
• 5:31
  SPEAKER_00: So planting pace in Brazil is off to a great start, and weather looks okay.
• 5:36
  SPEAKER_00: As far as Argentina, again, planting pace, as we've talked about, is super fast for corn.
• 5:41
  SPEAKER_00: Hadn't started planting beans yet, and they continue to get light scattered rains.
• 5:46
  SPEAKER_00: So hard to find any problems in Argentina either right now.
• 5:50
  SPEAKER_00: That's it for today.
• 5:51
  SPEAKER_00: Thanks for listening.
• 5:51
  SPEAKER_00: We'll be back tomorrow.