SunPrairie Grain Morning Comment

MINOT - Jun 11/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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

Morning Outlook as of 8:30 CDT:

Wheat: 5-6 higher, spring wheat really gaining ground, hard red winter wheat under pressure due to harvest, lower US dollar provides support (Mpls July last trade 7.77 ¾, KC July 6.60 ¾)

Soybeans: 8-10 higher, thoughts that crop conditions will decline in this afternoon's weekly USDA report has prices higher, outside markets help (July last trade 14.35 ¼)

Corn: mixed, July contract a few pennies higher but balance of futures contracts are trading lower weather concerns are primary focus (July last trade 6.00 ¾)

Sunflowers: 5-10 higher, demand is weak but stronger soybeans, soybean oil and crude may lift prices

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

*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!*

Today:

Grain futures are mostly higher so far this morning with the exception of the corn market which is trading with most contracts lower. Rain to the Midwest is the main fundamental focus for grain prices right now, especially for the corn and soybean markets. Wheat prices are mostly looking to row crops for direction. The US dollar is lower as Spain was given a $125 billion bailout. Concerns about the Greek elections and potential for Greece to leave the EU remain but for now the market is focused on the favorable news out of Spain - the Euro is trading higher on the news. A series of recent economic reports out of China were better than expected, indicating that the Chinese economy is ok for now. This won't change anything for you - but just as an FYI - open outcry hours on the Chicago Mercantile Exchange are expanding closing hours to finish with the electronic session at 2 PM Monday through Friday (starts June 25th). The USDA's monthly S&D report comes out tomorrow morning.

There is little news to get the wheat markets super excited right now. Chatter that Russia is declaring a state of emergency to some dry areas could be considered favorable to the market. However - where are the dry areas? Are these major crop areas? I'm not sure. It does seem, though, that hot and dry weather has returned to Russia recently which will definitely be of interest to the wheat markets especially. India is continuing to export wheat which means the US could see a slow in business to Asian countries. Spring wheat and hard red winter wheat basis are struggling. Winter wheat basis makes sense as harvest progress continues rapidly with dry weather to the US southern plains. Spring wheat crop conditions are mostly favorable and the crop is in good condition, keeping basis in check. Global ending stocks for 2011-12 are expected to increase, just slightly from last month's estimate of 197.03 million MTto 197.12 MT. Global ending stocks for 2012-13 are expected to decline from last month's estimate of 188.13 MT to 184.79 MT. Which countries will see the biggest reductions in production estimates, if any?

Soybeans are higher this morning, trying to post double digit gains. Stronger crude (up 20 cents/barrel) and a lower US dollar help support the soybean market. Also, ideas that double crop soybeans in the southern plains may not happen due to dry weather and thus cutting US acreage and supplies keep the market excited. What will the USDA do in tomorrow's reports to US supply and ending stocks for 2012-13? Globally the market is expected to see a reduction in 2011-12 ending stocks from last month's estimate of 53.24 MT to 52.09 MT. Global stocks estimates for 2012-13 are actually expected to increase from last month to 58.14 MT from 58.07 MT. News that China had the biggest imports for five months in May is encouraging - will this demand extend to June? Thoughts that soybeans could see a reduction in crop conditions this afternoon also keeps things higher.

Speaking of crop conditions, corn is also expecting to see a reduction in crop condition ratings this week as some of the dry crop in the Eastern Corn Belt falls out of the "good to excellent" category. Some rain did fall to the Midwest but coverage is pegged at only 35%. A massive system that spread from Canada to Kansas hit Minnesota and Iowa pretty well yesterday but as the storm moves east it seems to be losing power. However it looks like Missouri, Illinois and parts of Wisconsin may get decent rain from the system which may provide some relief to fields that are thought to be too dry. Obviously the corn market has very much turned into a weather market which is typical at this time of year. Despite weather concerns, though, corn prices are still lower this morning. Expectations for huge US production keeps gains limited. Global ending stocks for 2011-12 are expected to increase only slightly. Global ending stocks for 2012-13 are a different story and are expected to decline to 149.75 MT from last month's estimate of 152.34 MT.

It looks to be pretty mixed today with outside markets being and weather being the two biggest factors for grain trade right now. Additionally, grain futures could be fairly quiet in front of tomorrow's monthly USDA S&D report and will also keep an eye on this afternoon's crop conditions report.

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.