SunPrairie Grain Morning Comment

MINOT - Jun 29/12 - 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: 4-6 higher, just following row crops, USDA does not offer much helpful information (Mpls Sept last trade 8.41 ½, KC Sept 7.56 ¾)

Soybeans: 18-20 higher, USDA says acres and stocks are higher than expected but the market continues to focus on yield (Nov last trade 14.23 ¾)

Corn: 9-11 higher, acres higher than estimated but the market has shrugged it off due to continuing yield concerns (Dec last trade 6.41 ¼)

Sunflowers: 5-10 higher, demand will limit gains but soybean oil and crude are sharply higher this morning

Canola: 20-25 higher, rally with soybean complex and crude - which is up about $4/barrel

*Markets close Tuesday, July 3rd at noon. Pit and electronic trading then reopen July 5th at 9:30 AM.*

Yesterday:

Prices sagged a bit in yesterday's trading session. Spring wheat was down four cents and hard red winter wheat was down eight cents. It seems lower corn prices were enough to drag wheat prices down yesterday as there was little else for wheat to trade on news wise. Corn prices were stronger on the open but faded into the close, likely correcting before the release of a pair of USDA reports Friday morning. Soybeans also struggled yesterday as fund selling pulled prices lower, finishing the day down nine cents. Canola prices were off 25 cents and sunflowers were down a dime. It seemed the markets were taking a breather after posting several days of straight gains earlier in the week.

Today:

Grains were up in overnight trade before the release of this morning's pair of USDA reports. The reports were pretty uneventful, providing no really shocking news to stir prices up. These markets remain heavily focused on weather forecasts and yield potential. The US dollar is lower this morning, being pushed lower by a higher trading Euro. The Euro is up due to lenders easing terms on their loans to Spanish banks, which eases concerns about the Eurozone debt crisis for the time being. Crude prices are sharply higher this morning which may lend a helping hand to grain markets.

Well the USDA did not offer much in the way of surprising news for wheat prices this morning. June 1 wheat stocks were slightly above market estimates of 723 million bushels at 743 million bushels. However, stocks are well below last year's levels of 862 million bushels. All wheat acres were slightly lower than expected at 56 million but up slightly from March planting intentions estimates of 55.908 million. Spring wheat acres were at 12.6 million - up from the March estimate of 11.976 million. Durum acres were at 2.2 million - in line with March estimates and analysts' estimates. Wheat prices have gone from higher to mixed this morning and are really lacking clear direction. We can expect to see nearby spring wheat basis merge to harvest values shortly. All in all, it looks like a pretty quiet ending to the week.

The pair of USDA reports offered little in the way of favorable news for the soybean market this morning. However, the reports have been shrugged off as soybeans focus on yield. Sure, acres may be up but who cares if yield is sharply lower? Additionally, the acreage estimates are reflective of double crop soybeans. Did those soybeans make it in behind winter wheat harvest in the southern plains? It would not surprise me if we saw soybean acres reduced in the coming months as I'm not convinced that dry weather has permitted planting of double crop soybeans. Overall the USDA put soybean planting at 76.1 million acres, higher than analysts' estimates at 75.5 and March intentions of 73.9. It is no surprise that record acres were noted in North Dakota. Soybean stocks were only slightly above estimates at 667 million bushels (estimates at 635 millbu) and are above last year's June 1 stocks of 619 millbu.

Canola acres were up significantly from last year's 1071.5 thousand acres at 1631.5 thousand acres. North Dakota canola acres were much of the increase as we planted 1.3 million acres of canola this year - up sharply from last year's 860,000 acres. North Dakota flax acres were also up this year but well below what was planted two years ago. ND flax acres are pegged at 260k this year versus 150k last year. This puts all US flax acres at 285k - much higher than last year's dismal 178k of flax planted. All sunflower acres were at 1804.5 thousand acres in the US this year (1543 last year). North Dakota sunflowers made up for 740k acres this year with 580k acres reported last year. South Dakota saw a 105k increase in sunflower acres this year.

Well corn saw the biggest acreage since 1937 where an estimated 97.2 million acres were planted. This year the US planted 96.4 million acres of corn according to the USDA. The market had estimated 96.09 million acres planted and March estimates put us at 95.864 million acres. The market was expecting big acres so this comes as no surprise. The big question mark is yield and that is what prices are focusing on right now. Corn prices are a dime higher on yield uncertainty this morning. Corn stocks were slightly below market estimates of 3.174 billion bushels at 3.148 billion and below last year's June 1 stocks of 3.67 billbu.

These markets waited a long time for this pair of reports but have since shrugged them off.

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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