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Daily Market Podcast Sep 28 · M6 Capital Daily Market Podcast

• 0:00
  SPEAKER_00: Good morning.
• 0:01
  SPEAKER_00: Chris Myers with M6 Capital Management with our daily market letter on Monday morning, September 28th.
• 0:07
  SPEAKER_00: Walking in this morning, December corn is down 5.5 at 522 and 3 quarters.
• 0:12
  SPEAKER_00: November swimming beans are down 24 and 3 quarters at 1294 and three-quarters.
• 0:17
  SPEAKER_00: December meal is down 870, and November crude is up 270 this morning.
• 0:23
  SPEAKER_00: Before we get on to corn and beans, we got two things we need to talk about this morning.
• 0:27
  SPEAKER_00: First is U.S.
• 0:28
  SPEAKER_00: China.
• 0:29
  SPEAKER_00: Both corn and swimming markets sold off Friday morning with what appeared to be no new grain trade deal with China and then reversed and closed higher after Trump made some very vague statements to the press that farmers would be very happy.
• 0:44
  SPEAKER_00: Over the weekend, we got more vague statements regarding China.
• 0:48
  SPEAKER_00: Supposedly the U.S.
• 0:49
  SPEAKER_00: and China agreed to drop tariffs on$30 billion of, and I quote, non-strategic goods.
• 0:57
  SPEAKER_00: Whatever those are.
• 0:58
  SPEAKER_00: We're left to guess.
• 0:59
  unknown: U.S.
• 1:00
  SPEAKER_00: trade rep Greer said that more details will be issued today, Monday.
• 1:06
  SPEAKER_00: The market will want to see China eliminate import tariffs on U.S.
• 1:10
  SPEAKER_00: agts, but even if that happens, U.S.
• 1:12
  SPEAKER_00: grains are still too expensive versus Brazil and Argentina.
• 1:15
  SPEAKER_00: I still contend that China dropping tariffs on U.S.
• 1:18
  SPEAKER_00: corn and soybeans is meaningless, but the market seems to think that means something.
• 1:24
  SPEAKER_00: I do not.
• 1:26
  SPEAKER_00: Also, we've got a USDA grain stocks report.
• 1:31
  SPEAKER_00: USDA will issue its September 1 U.S.
• 1:35
  SPEAKER_00: grain stocks report on Wednesday morning, 11 o'clock Central Time.
• 1:39
  SPEAKER_00: The average market guesses are listed on the bottom of page one.
• 1:43
  SPEAKER_00: This report is typically not a huge market mover, but on occasion there are some surprises out of USDA.
• 1:51
  SPEAKER_00: As far as corn news this morning, the CBFT corn market is lower this morning on what seems to be disappointing lack of solid news on China.
• 2:02
  SPEAKER_00: The market had been excited about this Trump Z meeting last week and was hoping for more U.S.
• 2:07
  SPEAKER_00: corn export information to China.
• 2:11
  SPEAKER_00: Well, Trump's vague statements on Friday gave the market a sliver of hope, but as of this morning, it looks like we're back on the disappointment train.
• 2:21
  SPEAKER_00: The corn market still has an absolutely massive spec-along position, and this morning we're missing any new bullish news.
• 2:30
  SPEAKER_00: So once again, we are left wondering not only what will push this corn market higher, but what news will keep these speculators in their current positions.
• 2:40
  SPEAKER_00: It's hard to see what that news is this morning.
• 2:43
  SPEAKER_00: Maybe, just maybe, USDA will give us some bullish news on corn in their stocks report Wednesday.
• 2:51
  SPEAKER_00: And it is interesting to note that the range of market estimates on September corn stocks is very large, uh, from very small stocks to very large stocks.
• 3:04
  SPEAKER_00: So it does seem that if today, tomorrow, we don't get some extra meaningful news out of the White House regarding China, or if this stocks report on Wednesday is not bullish, then we risk the speculators washing out of their long positions, and that could easily mean a quick, nasty price break coming for CBOT corn.
• 3:26
  SPEAKER_00: As we stated last week, unless we get some new bullish news, CBOT corn is too high right now.
• 3:33
  SPEAKER_00: I do remain bullish corn prices later on, like next spring and summer, but just not right now.
• 3:41
  SPEAKER_00: As far as soybean news, as of this morning, nearby soybean prices remain the cheapest out of Argentina.
• 3:47
  SPEAKER_00: Brazil and the U.S.
• 3:48
  SPEAKER_00: Gulf are basically even money, but ocean shipping rates out of Brazil are cheaper than shipping rates from the U.S.
• 3:56
  SPEAKER_00: Gulf to both Asia and Europe.
• 3:58
  SPEAKER_00: So Brazil has the advantage.
• 4:01
  SPEAKER_00: What does all that mean?
• 4:02
  SPEAKER_00: Well, this tells us that U.S.
• 4:04
  SPEAKER_00: soybean prices are too high and we're losing export demand.
• 4:07
  SPEAKER_00: Even if China did cut the 10% tariff on U.S.
• 4:10
  SPEAKER_00: soybeans, Brazil and Argentina beans are still cheaper landed China.
• 4:14
  SPEAKER_00: So, like corn, we walk in this morning with speculators having record large long positions and no bullish news.
• 4:22
  SPEAKER_00: The near-term risk is clearly to the downside.
• 4:25
  SPEAKER_00: The USDA stocks report on Wednesday is not expected to give as much.
• 4:30
  SPEAKER_00: And the weather for Brazil appears to be getting better.
• 4:34
  SPEAKER_00: They're getting better chances of rain in Mato Grosso, which has been their driest area.
• 4:40
  SPEAKER_00: As far as weather, um, this hurricane polo off the west coast of Mexico looks like it is headed into Texas and then across parts of Oklahoma and Arkansas.
• 4:51
  SPEAKER_00: So that does join up with a low pressure system in the plains and um give some pretty decent range to Texas and Oklahoma.
• 4:59
  SPEAKER_00: And then uh on the bottom of page two, I've got um the 10 day precip outlook for South America and the dry areas in both Brazil and Argentina look like they're getting better chances of rain.
• 5:12
  SPEAKER_00: So, weather in South America is not bullish whatsoever.
• 5:16
  SPEAKER_00: That's it for today.
• 5:18
  SPEAKER_00: Thanks for listening.
• 5:19
  SPEAKER_00: We'll be back tomorrow.