Markets Now Early - 9-9-26 Mike Castle, StoneX

0:00Markets now is brought to you by Pervant Seats. There are wins, and then there are wins that you get with Pervant Seats. Big game-changing wins that turn heads and make people take notice. Get started at Pervant.com slash Change the Game. And welcome to Markets. Now I'm going to show work with my Castle with Stone Axe, and we're seeing green and livestock futures, a lot of red on the board this morning. Mike, thanks for being with me. Let's talk about the grain space first of all. We have some black seed. We have some flash sales, but we're down this morning. Is this just about report positioning, you think? I would assume so, especially in the context of we're coming into this with these massive, you know, in some cases, record fund longs throughout the entire grain and oil seed complex at this point. So, I'll give you a little to their every headline that I've seen so far this morning, woodpoint, more to the bullish case, right? Continuing to see that escalation between Russian Ukraine, most notably with Ukraine carrying out some pretty

1:00heavy strikes on Russia's black seed port of Novo, their biggest commodity exporting port out of the black seed. That flow is still pretty much shut off. Russia is trying to cut off Ukraine's alternative with the overland routes, struck another border target with Motova here in the last 24 hours. So, most of the kind of signs are still pointing to that escalation, but I do think it is probably just a reflection of some profit taking from the funds again in that context of the huge walls going into the report. Yeah, so let's talk a little bit about the WASD preview coming up here because we did have average trade guesses out here yesterday or basically 178.1.2 on Cornield. You guys were above that. Talk a little bit about what is the market trading right now? Do you think? Yeah, I would have said something in the I-170s that 178.2 average guess was probably a little lower than what I would have expected. But again, it does

2:00seem like historically we kind of see USDA cut their yields moving from August to September. It is kind of more common specifically on the corn side of things. Our Stonach September customer survey estimates came in at 182.9 on Corn and 50.3 on soybeans. That's a drop of 1.9 bushels per acre on the corn side unchanged on the soybean side of things. I think it's really interesting to kind of look at just how much extreme weather we've seen in that last month since the August WASD. Obviously last half of August you saw an extremely wet pattern, especially throughout the eastern Midwest. And obviously, you know, not to discount the areas that are flooded out that had complete production losses from this. The broader pattern is more rain across the area. So it's going to be interesting to see how you see the weather. It's going to be interesting to see how USDA offsets that versus this kind of heat wave that we've seen that's kind of sped up. But surety over the last couple of weeks at this point, honestly, at that.

3:00And at least here in KC, it feels like it's just not stopping. But I do think you're later filling beans certainly could have seen some detriment from that heat wave. Depending on how far north you are, obviously with Al-Hodden dry, some areas bend. But surety is just already ahead of schedules and probably not as much impact. But it should be a little bit much impact. But it should speed harvest up. You know, it is worth noting we're kind of ahead of schedule across the board. So we should kind of start to get a better feel for those yield estimates, kind of fairly quickly as we get those reports from the field. So far early stuff has largely been either in line with expectations or better to this point. But it is worth noting some of those areas had very low expectations, right? Like the southern plains, for example, where they're already in full swing. They obviously had a pretty ugly finish to the season and not a great growing season to begin with. So not a shock to hear that. But again, I do think maybe today's price action is a reflection of, you know, the market trying to price in something even lower than that 178.2. Coming into this report, but

4:00at the same time that does feel like, again, a fairly bullish print to if we were to see it. So it doesn't really make a ton of sense to see prices trading lower like they are today. So again, I kind of just go back to probably some funds got them off loading length at this point. Well, let's go back to your stone X number 182.9 on corn. And when you look at some of the state by state breakouts, Minnesota, you have it to Nebraska 186 Illinois at two 12. And those are maybe a little bit questionable by some in the trade, thinking those are a little too high. Why did you guys go so high with some of those states? Yeah, so this is a customer survey, right? This is not just someone at stone X, but I get done number together. This is a very, very large undertaking. It's actually done by our to point office. I know Arlan is the one that gets yelled at, but it's really not his. But overall, I mean, what we did see from August to September, I've just got the numbers here in front of me. We did see kind of all of the western

5:00states, specifically the Dakota's Nebraska Kansas, even Minnesota, and Iowa all down from September from August, I should say, Missouri Michigan and Oregon Ohio are the only states to see increases. Again, I think that's kind of a reflection of the finish that we saw here in August. Obviously, very, very wet in the eastern Midwest, very dry in the western, especially northwestern Midwest. Overall, again, I know people, if you're a farmer, you're not going to want to see a big yield number, but it's worth keeping in mind. Last year, we saw a similar situation. The stone X customer survey estimate was higher than everyone else, and it ended up being the closest to USDA than everyone else, right? So, overall, again, I know people, if you're a farmer, you're going to be the best at the end of the year. So, again, that risk is certainly in play. My own gut feel is that we probably see USDA move a little lower from here, or, honestly, I don't think they're incredibly far off at their 187. If you kind of average this, versus what surveys show you versus the much higher satellite-based deal estimates that are more like 184 to 186. And

6:01then look at something like a conditions index model. That's pretty close to where USDA sits today, probably somewhere in the low 181s. So, truthfully, I don't know that they have a huge need to move a significant amount either correction. But, again, the seasonal pattern is usually to see USDA move a little bit lower from that August number into final with September being kind of one of the stepping stones along the way. Yeah, for sure. Okay, so beans, the average trade gas, 152.352.4, depending on which new service you use, you guys are going to be expecting a lot of the same amount of the same amount of the new service you use. You guys are at 53 bushels breakers. So, really, nobody is expecting much change from the August figures because it's what too early, right? Yeah, I don't think you'll see a huge move. Again, just timing is really a big factor there. It is worth pointing out this September stone X number has been within

7:01zero point three bushels of USDA September number. So, I, again, don't expect USDA to really have much incentive to move from the current 52 seven. I thought it was maybe a little early for them to make that cut on the August was D, but truthfully, if you just look at a precipitation by weighted area of where soybeans are produced in the US, a looking at that model would tell you they probably need to move you higher by about half a bushel and acre. Again, are they going to do that on the September was D or wait till later at the year? I would expect them to probably be able to get a little bit more later because again, you had this really, really wet August and know there were localized issues where that was too much wetness, but in general that is favorable for soybean yield at the national level. Again, how do you offset that against all this heat during pod fill? Really is going to come down to how mature the crop was. So, the further north you are, obviously the more risk we've seen, but they also didn't get the same extreme temperatures we've had down here in the hundreds here for a couple of hours. So, I think that's going to be a

8:01little bit higher in the hundreds here for a couple of weeks. So, again, I don't think USDA is going to need to make a huge move in either direction on the soybean side of things specifically. My gut would be to see them, you know, if anything, move higher at this point. But at the same time, I don't know that that's really the biggest factor. I think at the end of the day, it's just a reflection of how little wiggle room there is in the balance sheet because of how strong the demand side is. Obviously more flash sales today, a record crush upcoming. So, if you do see US D.A. actually makes a yield cuts, you're talking about a much more material tightening of the balance sheet because of how strong demand side is. Yeah, and let's talk about that demand, Mike. I mean, there was rumors already yesterday that China was in for some more soybeans today between China and unknown over 16 million bushels of soybeans, corn 7.2 million bushels to Mexico. Obviously, we're not at prices yet that are really starting to ration demand. And that's encouraging the demand side of the trade side. So, it's a very very important demand side

9:01of the demand side. And that's encouraging isn't it? Yeah, especially, you know, the fact that we've seen China now get probably roughly about halfway to that 25 million tons that they allegedly agreed to. It's good to see them continuing to show up in those daily flash sales yesterday, we didn't get any of that broke a streak of six consecutive business days with them. So, seeing that return, again, reports of even bigger volumes than those having traded hands. It's a unfortunate thing to see it. It's worse than good conditions for the most increased trade deals and posses it is, remember, we have significantly less excess supply relative to domestic demand because we're crushing record volumes. Again, you'll see that again, they're probably roughly halfway. Maybe they try to get closer to a 15 million tons or something and keep in mind, we just don't have that much wiggle room. The more this continues, the more

10:03of those purchases they make, the tighter we're getting. Yeah, for sure. Okay, so we have this Canadians back going back and forth. Is it having any impact quick on any of the markets? I think you could say that negative headline maybe is some of it. At this point, we've seen this rhetoric between the US and Canada for a year and a half at this point, the vast majority of ag products, specific to the grains, fertilizers, has been exempt. So we assume that's going to continue to be the case. Hopefully we don't see it escalating to the outside. Truthfully, I think this is overall a negative for both sides. We've built very, very efficient systems from Canada, the US into Mexico. It operates as one, very, very efficient supply train. Truthfully, adding these tariffs is just a detriment to all sides of my opinion. So hopefully we can reach some kind of agreement and put this one to bed and behind us. Absolutely. Cattle market. Nice big update yesterday. We got back above some key moving averages in the feeder market, but is today about profit taking or are we

11:09setting back with a Dow down crude oil hire? Yeah, obviously we're seeing this kind of broader selling pressure throughout the empire commodity complex. It was nice to see that reaction on the future side in response to the strong cash trade we saw Friday and then over the weekend. It is worth noting that's technically it's not in the five-area average for confidentiality regions, the trade to replace the Kansas and Texas. But it does seem like, you mentioned the technical side, it seems like the cattle market's trying to kind of put in its bottom. I think the worst of this psychological impact of these big, you know, tariff free beef imports and then obviously as well the reopening of the order, maybe both kind of, you know, seeing the worst of that negative sentiment priced in at this point and trying to find that bottom, but obviously you're always pretty hard to fall. All right, thanks so much. That is my castle with Stone Ex and markets now. You can just picture it, the anticipation before the big moment, the ban playing, be it adrenaline flowing, the confidence that you're about to hit the field and simply dominate. Now you know

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