SunPrairie Grain Morning Comment

MINOT - Jun 14/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Morning Outlook as of 8:30 CDT:

Wheat: 7-9 higher, reductions in Australian and German wheat production, export sales for the week above expectations (Mpls July last trade 7.80 ½, KC July 6.50)

Soybeans: 6-8 higher, very strong export sales and a tight carryout work to pull soybeans higher while weather limits gains (July last trade 14.13 ¼)

Corn: 7-9 higher, highest ethanol production since February reported yesterday, market recovering from yesterday's losses on deferred contracts (July last trade 6.03 ¼)

Sunflowers: 0-5 lower, soybean oil struggling, not too sure why with soybeans and crude prices stronger

Canola: 0-5 lower, futures board lower, trade is quiet, uneventful

*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. For those of you with planted Victory Canola -remember that you can price an additional 250 lbs/acre with an AOG. Thank you!*

Yesterday:

Corn had a lower start but July futures rallied into the close as ethanol production numbers were the highest since February. Other corn futures contracts did not hold out so well, though and finished the day lower. Spring wheat finished the day higher with lower production estimates out of Australia and Germany. Hard red winter wheat futures struggled as harvest progress keeps prices in check and cash prices finished the day a penny lower. Soybeans were hard hit yesterday, finishing 27 cents lower. Soybean meal was sharply lower yesterday and that pulled the rest of the soybean complex right on down. Crude prices were lower, soybean oil was lower so sunflowers, flax and canola yesterday all posted losses.

Today:

It looks like we're in for a higher day today if early morning trade is any indication. Soybean oil is still struggling, as are canola futures, but other than that everything looks pretty good. The US dollar is slightly higher this morning due to concerns out of Europe. Greece is having its election this weekend and the results could end up with Greece leaving the Eurozone and that will keep things on edge. Rains in the forecast for US corn and soybean growing areas are limiting gains in the row crops today. It's possible for 1-2" to fall across the Corn Belt from today through Sunday and the market will certainly be watching to see what happens. Corn export sales for the week were very poor but the market seems to be ignoring the information for now.

Wheat prices are nearly a dime higher this morning as the market turns its focus to reductions in both German and Australian crop production estimates. Australian production was decreased by ABARE due to fewer acres getting planted and dry conditions. Continued talks that India will be exporting some of its government supplies keep things on edge. The Indian government does not have the storage capacity for the huge wheat crop produced this year. The government plans to sell most of the crop domestically but some exports will likely take place and prices discussed are well below current levels. If India decides to export cheap wheat it will definitely put pressure on global wheat prices as other countries try to maintain their market share. However, it does not sound like India will be exporting a significant amount of grain as the government would like it to stay in the domestic market. Only time will tell. US hard red winter wheat harvest keeps on chugging along. I am now hearing reports that Kansas' protein is coming in lower than the early harvested crop - averaging from 11.0-11.5% protein. This is good news for protein premiums and spring wheat. Yields are big. Export sales for the US this week were at 432.9 thousand metric MT(TMT) which is well above estimates of 150-350 TMT.

There is little going on in the soybean market as far as news goes right now. Prices are up about four cents at the moment and seem to be struggling to stay higher. Export sales for the week were phenomenal and well above market estimates of 450-750 TMT at 1005.1 TMT. The huge sales for the week will only strengthen concerns about tight carryout estimates - that the USDA made even tighter earlier this week. Short term weather, though, is favorable and that could limit gains for soybeans. The market will continue to keep an eye on whether or not a soybean crop will follow harvested hard red winter wheat fields. We need the acres. Canola futures look like they are struggling to trade higher this morning and crude prices are kind of drifting lower. We'll see if other oilseeds can follow soybean market direction.

Weather remains king of the corn market news as there is really little else going on right now news wise. Rains in the forecast for today through the weekend in the corn belt will limit new crop gains. Old crop prices continue to climb faster than new crop as supplies are tight and huge US production is expected this year. Right now, old crop corn contracts are up 11 cents while new crop is up only six cents. Export sales for the week were really bad. Estimates were for sales of 350-750 TMT and we came in at 169.8 TMT - yikes! The market does not seem to notice, though, as futures climb higher. Could stronger ethanol production numbers be the reason? I'm not sure but it looks like corn wants to rally today.

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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