SunPrairie Grain Morning Comment

MINOT - Apr 1/11 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Opening Calls:

Wheat: Unch/+2, running out of steam after yesterday's sharp price increase (Mpls May last trade 9.25 ¾, KC May 9.08 ½)

Soybeans: 3-5 lower, market lost momentum in overnight trade (May last trade 14.05 ¼)

Corn: Old Crop - 38-40 higher New Crop - 7-9 higher, tight stocks have old crop prices excited and pulling new crop along (May last trade 7.34 ¾)

Sunflowers: 0-5 lower, pressure from soybean oil board after strong gains posted yesterday

Canola: 5-10 lower, market relaxes after yesterday, acreage increase could pressure prices

*Our Victory Canola program is winding down and will be wrapped up by this time next week. If you're on the fence about booking acres or are contemplating booking more, now is the time to do so. If you have any questions regarding pricing please do not hesitate to ask. Thank you! *

Yesterday:

The pair of USDA reports was all the news yesterday and anything else pretty much did not matter for the markets. Corn was the leader as it was locked limit up (30 cents) all day - resulting in expanded limits (to 45 cents today). Soybeans and wheat followed along for the ride as soybeans gained 35 cents and spring wheat 38. Wheat really did not have much of a reason to rally considering the reports were somewhat bearish with acres and stocks both being higher than expected. Soybeans definitely had reason to rally with acres being cut, with demand expected to stay strong.

Today:

We're kind of all over the board today. Nearby corn futures are definitely taking advantage of expanded limits as May futures are well into seven bucks, up over forty cents. Spring wheat is up a couple of pennies whereas KC and Chicago wheat futures are just barely over unchanged. Soybeans are not doing well holding gains as they're down a nickel. Corn will do what it can to support the other grains today but a higher dollar could make it difficult. Crude isn't doing much as it's up about 45 cents a barrel.

Like I said above, wheat did not have much reason to rally yesterday so it does not really surprise me that futures are struggling a little bit this morning. However, the good news is that futures finished up at their highs for the overnight and are pretty well off overnight lows. Perhaps we will have some strength in today, but the likely reason would be due to corn market strength more than anything. Rain is in the forecast for dry areas of the winter wheat belt. However, longer term forecasts are lacking moisture which could continue to provide underlying support to the wheat market.

The soybean market, like the corn market, also needs huge yields in order to even think about rebuilding stocks. Stock rebuilding could be difficult considering soybeans did not get the planting intentions numbers wanted yesterday. Argentine soybean harvest is behind last year's pace of 14% complete at 7% complete.

Corn just does not want to quit, especially old crop. We're off of overnight highs but gains are still significant. The USDA stocks report yesterday really let the corn market know that serious price rationing needs to take place if we don't want to run out before harvest. How do we ration demand? Well, we increase prices, and that is exactly what the corn market is doing right now. Now that the planting intentions report has been released all focus will turn to weather. We need warm, dry weather to get planting going. We seem to be getting the opposite. Yes, it's early, but in a weather market any bit of weather related news is taken into consideration.

Oilseeds performed pretty well yesterday as well. Sunflowers posted substantial gains of 50 cents/cwt, putting birdfood prices quite close to that $30/cwt mark at 27.90 and NuSuns at $28.60/cwt. Canola prices also rallied yesterday as the futures board was sharply higher, following soybeans and other oilseeds higher. As expected, canola acres were up yesterday.

Durum finally decided to follow wheat along. The reason why that particular market has been so slow to react is due to the fact that end users have coverage well into the May/June time slot. They just are not in a hurt for the grain. However, with the recent price spikes and acreage reduction, perhaps the market felt it needed to gain some ground. Also, desert durum harvest is coming up and supplies of durum will be easy to get in hand.

As always you can reach me at Kayla.Hoffman

To discuss this report further or for specific trade ideas please contact me

directly

Kayla Hoffman

SunPrairie Grain

Kayla.Hoffman@chsinc.com

Toll free: 800.735.4956

Local: 701.852.1429

Fax: 701.839.5515

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