SunPrairie Grain Morning Comment

MINOT - Aug 30/11 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Opening Calls:

Wheat: 9-11 lower, US dollar is higher and rain in forecast for Southern Plains (Mpls Dec last trade 9.27 ½, KC Dec 8.86)

Soybeans: 7-9 lower, profit taking despite decline in crop conditions for major producing states (Nov last trade 14.38 ½)

Corn: 8-10 lower, Ukrainian maize crop forecast to be bigger than expected (Dec last trade 7.60 ¼)

Sunflowers: 5-10 lower, soybean oil and canola falling sharply after yesterday's rally, crude lower as well

Canola: 15-20 lower, canola board relaxes after several days straight of posting gains

*D.P. Update*

We are now CASH on spring wheat with VOM of 3.0 or more at all locations. Free D.P remains until July 31, 2012 for spring wheat with VOM of less than 3.0 as well as for all other commodities at all locations as space allows. Thank you and please call if you have any questions!

Yesterday:

The US dollar was lower and crude was higher which worked to spur a rally in the grain markets yesterday. By the end of the day soybeans were up 25 cents and corn a nickel (pressured lower towards the close by selling). Spring wheat was pretty quiet, gaining only 3 cents for the day. Winter wheat prices rolled to the December futures while basis remained unchanged, cash prices increased reflecting the carry in the market between September and December KC winter wheat futures. Canola traded extremely higher and gained 50 cents for the day. Sunflowers were up a quarter.

Today:

It looks like month end profit taking will hit the markets today as overnight trade was lower across the board. Spring wheat lost a dime and winter wheat was down 13 cents. Corn and soybeans were both nine cents lower. Outside markets are unfavorable as the US dollar is higher and crude oil is lower. A bigger than expected drop in corn and soybean crop conditions are doing little to help prices today it seems. Ideas that grain futures are overbought will likely result in some month end selling from investors. Canola is erasing about a third of yesterday's gains so far this morning and will look to the CBOT soybean complex for directions when trade begins.

Rain in the forecast for the southern plains is pressuring the wheat markets this morning. Much support has come from ideas that it is too dry for winter wheat planting in the southern plains...which produce much of the US winter wheat crop. Rains are not expected to provide all the moisture the soil would like but any precipitation is warmly welcomed at this point. US spring wheat conditions fell one percent to 61% good to excellent. Overall harvest is 50% complete versus a five year average of 71% complete at this time. North Dakota harvest is 25% behind average at 43% complete according to the USDA's weekly crop progress and conditions report. Expectations for a bigger than estimated Australian crop due to timely rains may also work to push wheat lower. While Australia's crop is not expected to be bigger than last year's the quality is expected to be much higher than last year's crop that was severely damaged by excessive rains.

Profit taking is hitting the soybean market despite declining crop conditions in three of the major soybean producing states. The soybean crop is rated 57% good to excellent which is a 2% decline from last week's ratings and is 7% below where last year's crop was rated at this time. Below normal precipitation is forecast to continue which may only further the stress on this year's crop.

Corn crop conditions also declined by more than expected...3% to be exact. This puts this year's corn crop at 54% good to excellent, compared to last year's crop rating of 70% at this time. Despite the continuous decline in crop conditions corn is not looking to trade higher today. The corn market has put in several sessions straight of posting gains and is looking to correct itself today. Business on the export front has been fairly quiet and basis has been under pressure. Ideas that Ukrainian's maize crop could result in increased exports will be unfavorable for the US markets as well.

As always you can reach me at Kayla.Burkhart

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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