SunPrairie Grain Morning Comment

MINOT - Jun 19/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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

Morning Market Outlook as of 8:30 CDT:

Wheat: 11-13 higher, market skyrockets with stronger row crops, declines in Russian production estimates (Mpls Sept last trade 7.63 ¾, KC Sept 6.79 ¾)

Soybeans: 38-40 higher, market up on low crop condition ratings, weather forecasts (July last trade 14.20 ¼)

Corn: 12-16 higher, crop conditions, hot weather forecasts (July last trade 6.12)

Sunflowers: 10-20 higher, soybean oil is sharply higher with the rally in the soybean market

Canola: 10-20 higher, rallying with the soybean complex, crude

Yesterday:

The US dollar was higher, crude was over $1/barrel lower and yet the grain markets managed to rally. Hot and dry forecasts and disappointing rainfall really helped the corn and soybean markets out, especially new crop. Corn finished the day with old crop prices up 20 cents and soybeans up 13 cents. Flax gained 15 cents but sunflowers were unchanged. Canola posted double digit gains as well. Spring wheat prices were up 12 cents for the day and hard red winter wheat posted 21 cent gains. Spring wheat lagged due to improving crop conditions while delayed winter wheat harvest allowed those prices to follow strength in the row crop markets.

Today:

Markets are relaxing about the situation in Europe for the time being which has the US dollar trading lower so far this morning. The US dollar is lower on the news and crude prices are rebounding after yesterday's losses. Overnight trade saw soybeans up about 35 cents, corn up 18, spring wheat up 11 and winter wheat markets are up 13 or more. Weather and crop condition ratings are the main reasons for higher prices in the corn and soybean markets. Wheat is following the strength in the row crops but is also concerned about global production estimates.

Well according to the USDA hard red winter wheat harvest is 48% harvested and progress continues to move northward into Colorado and Nebraska. I continue to hear mixed reports regarding protein. Some say it's high at about 12 and others say it's a bit lower at 11-11.5% protein. Spring wheat crop conditions increased by 1% to 76% good to excellent - that is why spring wheat prices are not posting the gains that the winter wheat markets are. North Dakota spring wheat is above the national average at 87% good to excellent. The crop is overall 33% headed so far. Barley conditions improved by 3% this week to 67% good to excellent and ND barley is rated at an astounding 91% good to excellent. Wheat is higher today with the fall in the value of the US dollar, rising row crops and reports that Russian estimates of its wheat production are falling.

Soybeans are much stronger this morning on a drastic decrease to crop condition ratings. I'm being told that the ratings are the lowest soybeans have seen in Mid-June for 24 years. The crop decreased 4% t6o 56% good to excellent - a lot lower than last year's rating of 68% good to excellent. This is why weather forecasts are so important. If growing areas remain dry it will be unfavorable for the developing crop and could result in decreased yield, production and ending stocks for the US this year. With high demand that makes for a pretty bullish looking soybean situation. For what it's worth the soybean crop is 95% emerged. There is also some chatter regarding dryness in Northern Chinese growing areas which only adds fuel to the bullish fire hitting the soybean market right now. The USDA says sunflower planting is 88% complete nationally, with ND being completely done.

Corn pollination is expected to start early this year and it looks like some of the corn crop in the eastern corn belt will be doing so in hot and dry conditions. However - corn usually pollinates in July when there are typically high temperatures so depending on what weather does it may not be so bad. Can you tell that corn is very sensitive to weather forecasts right now? Crop conditions declined yesterday to 63% good to excellent, compared to a 70% rating last year. The market remains sensitive to forecasts and crop conditions, that's about it.

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.