SunPrairie Grain Morning Comment

MINOT - Jun 5/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlook as of 8:15 AM CDT:

Wheat: 2-4 lower, tried trading higher in overnight hours but corn is turning lower and the US dollar is higher, so wheat has turned negative (Mpls July last trade 7.42 ¼, KC July 6.50 ¾)

Soybeans: 4-6 higher, weather concerns, crop conditions not as good as expected (July last trade 13.47 ¼)

Corn: 1-3 lower, turning lower as the tug of war between unfavorable macroeconomics and weather concerns continues (July last trade 5.67 ½)

Sunflowers: unchanged, market trying to trade higher with soybeans and crude but gains look to be minimal at best

Canola: unchanged, futures are slightly lower but could turn higher with stronger soybeans and crude prices. Overall a pretty quiet day for canola

*For those of you with AOG contracts (Flax, NuSun Sunflowers, HO Sunflowers, Victory Canola and Malt Barley) - we need land descriptions by June 15th and FSA 578s by July 15th. Thank you!*

Yesterday:

Crude posted gains of about $1.00 and the US dollar was pressured lower. Corn prices were lifted higher with technical buying interest and weather concerns as forecasts turn dry for areas of the Corn Belt. Old crop soybeans fell four cents yesterday with a lack of demand news for old crop being the primary reason. New crop soybean prices were a bit higher with weather concerns and demand. Wheat seemed to have a bit of a rebound yesterday due to technical reasons and following corn higher. There is also uncertainty about how much the Black Sea region will produce and ideas that maybe crop estimates are a bit aggressive. Sunflower prices were down 10 cents with lower beans and soybean oil - it seems crude wasn't enough to pull things higher.

Today:

The market is mixed and really lacking clear direction. There is little fresh fundamental news to drive prices and it seems markets are looking to outsides for direction. The US dollar is higher this morning, turning around after trading lower yesterday. Crude prices were higher 15 minutes ago but have since turned to 25 cents/barrel lower. It looks like everything but the soybean complex is struggling right now and we could see soybeans turn lower with the other grains and outside influences as well. Gains in the soybean market will at least be limited by action in the US dollar. Midwest weather and the lack of rainfall is the primary market news right now but macroeconomics will work against letting grain prices get higher.

Well winter wheat harvest is rolling along quite well and the USDA put it at 20% complete - well above the average of 5% complete. Rapid harvest progress will limit gains in the wheat markets and that is evident today as hard red winter wheat futures are posting the biggest losses of all the wheat markets this morning. The spring wheat crop is looking pretty good and is currently rated 78% good to excellent with North Dakota's well above there at 85% g/e. The market is largely expecting to see a decline in ending stocks in next week's monthly USDA report. Export business, though, is simply routine. It looks to be a pretty choppy trading day for wheat today and the markets will look to row crops for direction. For what it's worth - barley was left unchanged at 69% good to excellent.

Soybeans are 94% planted versus the five year average of 75% complete at this time - ND is 98% done planting its soybeans and the crop is overall 79% emerged. The first crop condition ratings were put at 65% good to excellent which was slightly lower than what the market expected. The crop condition ratings are partially the reason for higher trade in soybean futures this moring. Additionally, a lack of moisture for the newly planted and emerging crop keeps things on edge. This will very much remain a weather market as we move forward. The USDA is expected to report an increase in exports in next week's report. ND sunflowers are 80% planted compared to a five year average of 57% complete. Overall the US sunflower crop is 60% planted.

Corn conditions were left unchanged at 72% good to excellent. I think that with recent moisture concerns that the market may have been expecting a decline in conditions but that must not be too big of an issue quite yet. However, if dry forecasts are realized we could see conditions start to decline. China said that its summer grain output is expected to increase. For now this market will continue to see macroeconomics work against weather issues impacting the new crop. Other than that, there is little else happening to influence prices right now.

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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