SPEAKER_00 0:00

Good morning. This is Chris Myers with M6 Capital Management on Tuesday morning, July 21st. First off, I want to apologize for not being able to send out a morning report yesterday. I hope everybody got the email on Sunday night. I was on the road traveling, uh driving for 10 plus hours yesterday, so that really was kind of an impossibility. So walking in this morning, we have uh December corn down one and a half at 471.5. November beans are down a quarter at 1226. September crude is up $1.50 at 84 even. Before we get started on corn and beans, we've got several or multiple ongoing war issues that are impacting our markets. First thing, last night, uh Ukraine launched some 400-plus drones at Moscow. Russia continues to hit grain export facilities in Ukraine. At least one-third of Ukraine's grain export capacity is damaged as of today. This affects uh wheat and corn export flows uh combined between Russia and Ukraine. Also, um, the U.S. continues to launch strikes on Iran. Iran continues to attack U.S. Allied uh targets in the area. And uh also the Houthis have raised their involvement and they announced a blockade on Saudi Arabian vessels going through the Red Sea. All of this is supportive to crude oil prices and thus corn and soybean oil from a biofuel standpoint. As far as corn news this morning, we have a lot of items supporting CBOT corn futures right now. We have crude oil that is firm, we have the EU corn crop that is burning up, we have Russia and Ukraine fighting that's limiting grain exports, and we have a warm dry forecast for the U.S. corn belt. However, as of today, USDA's crop condition ratings remain above average. And the size of the U.S. corn crop uh is by far the most important variable to the corn market right now. I've got a chart on the bottom of page one. Uh you can see that the percentage of the U.S. corn crop rated good to excellent remains above average. Therefore, today condition ratings point to a better than average corn crop. Yes, we have a long way to go with this crop, but as of today, it's doing okay. This morning we are nearly 50 cents off our lows from late June, and the market has already priced in a lot of these factors we've discussed here. So, right here, right now, for this rally to continue, we really need to really threaten the U.S. corn crop. The forecast this morning continues to show below normal precip and warm temps for the corn belt, but the super hot temperatures remain isolated to the plain states. And with the corn crop being 59% silking, we are now entering the highest water use phase of the corn crop's development. So, yes, this forecast should threaten the corn crop. Um, and that should keep CBOT corn well supported. But we may need to get further down the road and see if condition ratings in the coming weeks actually decline more or not. Uh, I remain longer-term bullish, CBOT corn, but right here, right now, we may have rallied about all we can. The market may need to see more actual damage to the corn crop for us to rally much more, at least right now. Moving on to soybeans, CBOT soybean market is a totally different animal altogether. We've got China continue to buy U.S. beans, even though the U.S. soybean prices have rallied and now we are more expensive than Brazil for September, October, November. Um, U.S. crushers are having to raise their bids to compete with a uh decent export program. And thus meal prices have firmed also because crushers are having to pay up for beans. Crude oil is also supportive to high soybean oil prices. So the soybean market is more focused on demand than it is supply. Very different scenario than what the corn market's wanting to focus on right now. As for the USDA crop condition ratings, soybeans uh rated good to excellent actually went up yesterday. Uh, you can see a chart on the bottom of uh of page one. Uh condition ratings are really pretty decent today, and this implies a very good U.S. bean crop today. At some point, this bean rally should be sold. We're clearly just not there yet. Moving on to weather, uh, you can see the 1 to 5 and 6 to 10 day uh have very limited moisture for the corn belt, uh, particularly the plain states, but really the entire cornbelt. And then I've got the high temperature forecast for Saturday and Sunday, and we've got hundreds to 105s and even some 110 plus temperatures uh in the plain states. So crops continue to go down in the plain states, and this weather is a little bit threatening in the Corn Belt. That's it for today. Thanks for listening. We'll be back tomorrow.