SunPrairie Grain Morning Comment

MINOT - Jun 6/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

[cid:image001.jpg@01CD002F.571BB930]

Market Outlook as of 8:35 CDT:

Wheat: 4-6 higher, market rises with lower US dollar and stronger row crops (Mpls July last trade 7.34, KC July 6.44 ½)

Soybeans: 13-15 higher, crop conditions not as great as expected, talk of declines in Brazilian crop estimates (July last trade 13.70)

Corn: 6-8 higher, dryness to some Chinese growing areas, concerns about US weather (July last trade 5.76 ½)

Sunflowers: 5-10 higher, bean oil is stronger this morning, as is crude, so we can expect to see sunflowers a bit stronger

Canola: 15-20 higher, market stronger with soy, tight old crop supplies

*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:

Trade was pretty mixed yesterday but wheat really did not perform well. Spring wheat finished the day 14 cents lower and hard red winter wheat was down 17 cents. Weakness in the corn market, excellent spring wheat conditions and rapid winter wheat harvest put a lot of pressure on wheat prices. Soybean prices were a bit higher yesterday due to crop conditions being reported at less favorable than what the market had expected. Corn struggled, finishing the day with old crop cash prices down a penny. Canola struggled with nearby delivery falling off 15 cents but NuSuns were stronger as soybean oil was up in yesterday's session.

Today:

The US dollar is lower this morning, continuing its yo-yo swings that it has been displaying this week. Crude prices are recovering a bit - after sinking down to about $82/barrel we're back up around $85/barrel this morning, posting gains of about $1/barrel. There is some favorable macroeconomic news that is working to raise global stock markets as well. Chatter that the US Federal Reserve and the European Central Bank will both take separate action to boost their respective economies is encouraging. This has the US dollar sinking and works to push grains higher. However, there is still not a solid solution to the Eurozone debt problem. Overnight trade saw grains mostly higher as wheat is up over a nickel, soybeans are sharply higher and posting gains of about 25 cents and corn is about a dime higher.

Reports out of Kansas continue to talk about higher than expected yields and very high protein. Areas of Kansas are reporting proteins as high as 14% for hard red winter wheat. Yield reports vary but it seems they're averaging 40-45 bpa. There are good carries in hard red winter wheat prices (meaning that prices are better in later delivery periods than they are today) which has resulted in some farmers storing the crop for later delivery. This does not mean that the crop is not being priced or sold, that I'm not sure about, it just means that delivery is taking place at a later date so producers can take advantage of the carry in the market. High protein hard red winter wheat makes me a bit concerned about protein premiums as we move forward. The market is expecting to see increased spring wheat acres in the USDA's June 29th acreage report. Yield is still very much a big question mark. Overall, though, the crop is in excellent condition. Wheat is struggling in some areas though -I was sent a picture from the Red River Valley today of some wheat, headed out, that is not above knee height.

Well China has been pretty absent from the market but there was a report this morning from the USDA saying they bought some soybeans which may be the reason why old crop soybeans are so much higher this morning. There is talk of another Argentine strike which is scheduled to last a week. The impact on the market will be minimal, if anything at all. However, if the strike lasts longer than a week we could see that change. Brazil is thought to have record exports for the month of May. Also - Brazil's crop estimates have decreased again from a private analyst. Soybean crops in the RR Valley are struggling a bit due to dry weather as well. Crop conditions will continue to be a big influence on prices as will weather.

There is talk of dryness to some Chinese corn growing areas which, if the crop is impacted, may spur thoughts that Chinese demand will increase even further. It seems prices today are staging a bit of a recovery after struggling in yesterday's session. Corn is posting gains of about a dime right now for both old and new crop futures contracts. US weather remains a huge factor in new crop corn prices. The 6-10 day is calling for precipitation but it looks to be pretty hot before that across much of the US corn growing area. Chatter about a frost threat to the Brazilian winter corn crop could keep prices on edge.

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

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by or from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its staff or its management.