SunPrairie Grain Morning Comment

MINOT - Jun 27/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Morning Market Outlook as of 8:35 CDT:

Wheat: 10-12 higher, market continues to follow corn prices higher, some global production concerns keep prices supported (Mpls Sept last trade 8.39 ¼, KC Sept 7.59)

Soybeans: 18-20 higher, weather, export demand pull soybeans higher (July last trade 14.88 ½)

Corn: 20-23 higher, weather and how it will impact yield is the main concern for the corn market (July last trade 6.62)

Sunflowers: 0-5 higher, market has a tough time rallying with a complete lack of demand

Canola: 5-10 higher, market corrects with soybeans today, futures substantially higher

Yesterday:

Grain markets were mixed yesterday. Spring wheat finished the day five cents lower with a basis change being the reason for lower prices as futures were stronger. Hard red winter wheat prices finished the day 12 cents higher as those basis changes worked to push cash prices higher. Corn finished the day higher due to declines in crop condition ratings from the USDA's weekly report released Monday afternoon. Soybeans were 11 cents lower on the day due to profit taking slamming the market after several consecutive days of gains. NuSun sunflowers were hit hard again yesterday as demand is completely absent from the market.

Today:

It's looking like we could be in for yet another rally in today's markets. Wheat prices are higher this morning with spring wheat posting double digit gains and winter wheat struggling to maintain higher prices at the moment. Soybean prices are recovering today, erasing most of yesterday's losses. Corn is showing gains of 15 - 20 cents across its futures contracts this morning as the market completely focuses on weather forecasts for the Midwest. The US dollar is up a little bit today due to concerns in the Spanish banking system. Crude prices are also higher, though, this morning. "Outside" markets such as the US dollar and crude have had less of an impact on grain trade recently due to weather concerns entering the market. The USDA will release its acreage and stocks reports on Friday.

Wheat prices continue to follow the corn market. There really is little fundamental reason for spring wheat gains experienced this week, which is why I think this could be a good pricing opportunity for those of you comfortable enough to price out some grain. Basis values of -60 cents from the Minneapolis September futures contract looks pretty good - the average basis for harvest time at SunPrairie Grain is in the -70 to -80 cent range. I do not anticipate basis to get better as we approach harvest unless something unexpected happens to the crop. It looks like we're going to have a decent crop this year and crop condition ratings indicate that as well. Globally the market is still a bit concerned about production but dry areas of the Former Soviet Union are expected to receive some rain.

The soybean market is still pretty concerned about weather. However, it is widely believed that one good rain could be enough to get things back on the right path. Export demand for US soybeans remains pretty strong which will also work to keep this market supported. Concerns about global supply are around as there looks to be cuts to Indian production due to dry weather. Soybeans fell yesterday with profit taking hitting the market but all those losses are being recovered in today's trading session. Canola prices are stronger this morning with soybean prices - I'm very interested to see what the USDA will say about canola acres in Friday's report.

New crop corn futures are at values not seen since last year and it looks like they want to keep on climbing. Yes, there are a lot of corn acres in the US this year but that has been factored into the market. Now we're focusing on yield and ideas that it will be well below current USDA estimates. Farmer selling has picked up in the Western Corn Belt but farmers in the Eastern Corn Belt are, justifiably, holding off on selling due to production concerns. Hot and dry weather looks to continue in the Midwest which makes this market nervous and keeps prices supported. The general market consensus is that this rally will be short lived, but that is all going to depend on what the weather decides to do. Corn is entering pollination in some areas and the crop would appreciate some moisture during this key development period.

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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