SunPrairie Grain Morning Comment

MINOT - May 29/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlook as of 8:40 CDT:

Wheat: 5-6 lower, hard red winter wheat harvest pressure and beneficial rains to spring wheat growing areas (Mpls July last trade 7.84 ½, KC July 6.93 ¼)

Soybeans: 10-12 higher, Chinese acres lower, working to boost economy (July last trade 13.93 ¼)

Corn: 3-5 lower, with wheat, export demand sags (July last trade 5.79)

Sunflowers: 5-10 higher, with soybeans and higher crude futures

Canola: 5-10 higher, futures stronger with the soybean complex and crude futures

*For those of you with AOG contracts (Flax, NuSun Sunflowers, HO Sunflowers, Victory Canola and Malt Barley) - we need land descriptions and FSA 578s as soon as you have them. Thank you!*

Today:

Well after a long weekend it's a mixed day in the markets. Wheat and corn futures are lower but soybeans are posting double digit gains. Most trade action is weather related as there is really little else to drive price direction today. The US dollar is lower as there is optimism Greece will stay in the Euro Zone, but that is still very much up in the air. Losses in the US dollar could be limited by uncertainty with the Spanish banking system. Crude oil is about 50 cents a barrel higher this morning which may lend some support to the grain markets.

It seems wheat prices would like to relax after Friday's little rally we had. Spring wheat finished the day 11 cents higher but is giving back some of those gains this morning, posting losses of about two cents a bushel. Rains to much of the US spring wheat growing areas over the weekend have eased concerns about dryness and has spring wheat in negative territory this morning. Hard red winter wheat harvest is moving northward quickly as Kansas and Oklahoma made good progress over the weekend. Some harvest delays due to weather slowed things down in areas but it seems like harvest pace is going along quite well. Rain to Former Soviet Union countries and Australia has eased concerns about those wheat growing areas. The FSU was pretty dry, damaging crop development and potentially hurting wheat yields. Australia was having a dry planting season but recent rains have made for decent progress.

Soybeans seem to have a plethora of favorable news which all seem to point toward higher prices. US stocks are expected to be tight this year and we are very sensitive to any changes in weather. US soybean growing areas could use some rain which seems to keep things on edge. News that China will work to boost its economy is encouraging because if their economy stays strong, China will continue to buy US goods (and hopefully soybeans). Also, news that Chinese acres are expected to be down this year (more corn) is encouraging as Chinese demand for soybeans is strong. Hopefully smaller supply of soybeans means more purchases from the US.

The corn market is following wheat prices lower this morning. Liquidation continues to drive prices lower as well. Old crop futures are being hit by a lack of export demand as buyers focus their attention on what is expected to be an early harvest of new crop. This market is also all about weather right now. Rain has fallen to top producing states of Indiana and Illinois which may also work to push prices lower as we trade through today's session. Other than that news is pretty scarce for corn prices. Higher crude may work to limit losses but things are really very quiet as we analyze every new weather forecast.

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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