SunPrairie Grain Morning Comment

MINOT - Jun 22/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlooks as of 8:40 CDT:

Wheat: 10-12 higher, big US supplies working against ideas of tightening global production, rebound after yesterday (Mpls Sept last trade 7.82, KC Sept 7.08 ¼)

Soybeans: 16-18 higher, tightening global supplies, thoughts demand will increase from Asian buyers (July last trade 14.56 ¾)

Corn: 14-18 higher, rebound after yesterday, watching weather forecasts (July last trade 5.98)

Sunflowers: 0-5 higher, bean oil and crude are a bit higher this morning, demand remains unfavorable which could limit price gains

Canola: 5-10 higher, futures board rallies with soybeans - keep an eye on US acres

Today:

Some unfavorable economic news hit the markets yesterday - Moody's issued credit downgrades for 15 of the world's largest banks. This put pressure on stock markets and put an overall unfavorable mood in the air. For now the US dollar is slightly lower, crude is recovering after the past couple of days and grain markets are gaining back what they lost yesterday. Currently, spring wheat is up 11 and hard red winter wheat is up a dime. Corn futures are about a dime higher as well and soybeans are up 15 cents. It's still all about weather at this point. Trade could be slightly cautious in front of next Friday's release of the USDA's acreage and grain stocks reports. Fundamentally there continues to be little news other than changing weather forecasts to drive these grain markets.

US supplies are working against global production concerns. The US has seen a big hard red winter wheat crop this year and so far things are looking pretty good for spring wheat. Demand may pick up with concerns regarding global production and quality. Germany increased its production estimates but earlier this week announcements were made regarding the quality of the European crop. Europe could see crop quality decline due to unfavorable weather conditions throughout the growing period. Could this result in more demand for US wheat? India's government is still working at selling off its wheat supply as there is more wheat than there is storage. Winter wheat harvest pressure seems to be easing but spring wheat crop conditions will continue to limit gains in that market. Much of the strength in the wheat market of late has a lot to do with action in the row crops.

Fund selling hit the soybean market Thursday. Export sales were on the low end of market expectations which did not bode well for the market, either. It is encouraging though to hear that Brazil is about 90% sold on its soybeans for the year....Brazil is reportedly typically 70% sold at this time of year. Will this result in increased Asian demand for US soybeans? We can sure hope so. Global supplies keep feeling tighter and tighter which will result in the soybean market staying pretty well supported. The market will be very interested to see what the USDA has to say about acres in next Friday's report.

Corn is rebounding after yesterday's slide. Futures were down with a higher US dollar, lower crude and slow demand. Growing conditions remain a favorable market factor but export sales for corn for the week were just not good and barely above the low end of market estimates. The market remains so focused on weather at this point and will eagerly await the release of Sunday's forecast models. Temperatures are expected to cool in some dry corn growing areas which could provide some relief, but what this crop needs is rain. It seems that production estimate declines are likely unless the Eastern Corn Belt sees some widespread rainfall.

It looks like we're going to end the week on a higher note but as I said above, trade will be cautious next week as we approach Friday's acreage 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

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