SunPrairie Grain Morning Comment

MINOT - Jun 21/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlook as of 8:55 CDT:

Wheat: 4-6 lower, following a lower corn market, global production worries limit losses (Mpls Sept last trade 7.60 ¼, KC Sept 6.77 ½)

Soybeans: mixed, old crop higher but new crop struggles with profit taking (July last trade 14.34 ¾)

Corn: 8-10 lower, strong profit taking despite hot and dry weather concerns (July last trade 6.10 ¾)

Sunflowers: 0-5 higher, following a slightly higher crude oil market

Canola: 5-10 lower, market relaxes after posting substantial gains yesterday

Today:

Grains are seeing a bit of a correction after posting substantial gains in yesterday's trading session. Spring wheat and winter wheat both posted strong gains yesterday as markets were higher with much firmer corn and soybean prices. Soybeans were up 49 cents on the day with crop condition ratings being low and continued worries about US acres and tight ending stocks. Corn was up about 13 cents yesterday with weather and crop conditions being the main price factors there as well. Today corn is giving back most of those gains, about a dime lower with profit taking even though weather concerns for the eastern corn belt are still very prevalent. Canola saw new crop and old crop prices converge yesterday, meaning that old crop prices dropped quite substantially. Today canola futures are a bit lower with crude prices. The US dollar is trying to trade higher but is seeing it tough to do so with expectations for the Fed to keep interest rates unchanged and for Quantitative Easing 3 to be put into place.

Wheat is following corn prices lower this morning. Spring wheat, which has high crop condition ratings, is holding its own though and is down only six cents compared to the winter wheat markets being down about nine cents. Expectations for tighter global stocks and an increase in US exports should limit losses in the wheat markets. Winter wheat harvest pressure seems to be waning but spring wheat crop condition ratings will keep prices in check. Ideas that the European crop will be of lower quality this year are encouraging for the US markets as it could work to increase demand for US wheat.

There is really little fresh news for the soybean market. It continues to be all about crop condition ratings and weather at this point. Prices are trying to trade higher this morning but new crop is struggling. Indications that Chinese demand remain strong and will keep prices supported. Ideas that soybeans may not get planted behind winter wheat harvest due to dry weather will keep the market on edge about US acres. Canola prices are struggling this morning as are crude oil prices.

The corn market is lower with profit taking this morning even though there seems little reason for prices to go lower. The Eastern Corn Belt remains dry and that weather premium should stick around until rain falls (if in fact it does). There has been some producer selling picking up across the US which could also be contributing to the slight decline in prices this morning. News that ethanol margins are negative are discouraging as that could result in less demand for old crop corn. Ethanol plants could be waiting for new crop as prices are weaker than old crop and supplies are expected to be abundant, barring any major production issues.

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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