SunPrairie Grain Morning Comment

MINOT - Jul 26/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Morning Outlook as of 8:35 CDT:

Wheat: 1-3 lower, market struggles with corn and soybeans, global production concerns remain underlying support (Mpls Sept last trade 9.88, KC Sept 9.03 ¼)

Soybeans: 3-5 lower, rain showers move across Midwest providing much needed relief to soybean growing areas (Nov last trade 16.09 ¼)

Corn: 0-2 higher, market struggles with fund selling but recovers slightly (Dec last trade 7.88 ½)

Sunflowers: 5-10 lower, bean oil lower with soybean market being off, lower US dollar and stronger crude may help prices

Canola: 5-10 lower, falling with beans, market fairly quiet other than that

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Yesterday:

Markets recovered quite nicely yesterday after starting out the really, really poorly. Spring wheat pushed its way back over $9 for cash prices and HRW settled well into the mid seven dollar range. Flax was up 15 cents, sunflowers were up 35 cents and soybeans were up 46 cents, recovering almost half of what they lost Monday/Tuesday. Corn was up a dime as well yesterday. It seemed to be mostly a recovery day but outside influences helped as well as the US dollar decided to relax and trade lower for the day.

Today:

Spring wheat basis was whacked by 15 cents this morning already, taking local values to -95 the Minneapolis September futures contract. Basis declines really come as no surprise considering harvest is ramping up and new crop wheat is already hitting the market. Wheat futures cannot make up their mind this morning and are trading both sides of unchanged. Corn prices are also bouncing around this morning - recent rain events drive price direction. Soybeans are lower as rains to the Midwest really concentrated on Iowa which may have helped recover some of the US soybean crop production. The US dollar is sharply lower this morning which should be a supportive factor to the grain markets. The EU central bank said it will do anything to preserve the Euro, so concerns about the state of the Euro are eased for now.

Wheat trade was fairly quiet in the overnight session with light volume noted. It seems wheat prices are looking to corn for direction and, like corn today, cannot make up their mind as to which way they want to trade. Export sales for the week were at the low end of estimates at 367.0 thousand metric MT(TMT). Estimates ranged for export sales of 300-600 TMT. Predictions for the Australian wheat to be over 6% smaller than last year should be favorable for prices and add support to the US wheat market. Additionally, Russian harvest is reportedly 22% done and finding yields that are nearly 30% lower than last year. Global production concerns will likely continue to remain an underlying supportive factor to US wheat prices as less production elsewhere could mean more export business in the US. The North Dakota spring wheat tour found yields of 44.1 bpa on their second day, much better than last year's findings of 40.8 bpa. Spring wheat basis slid, as is really no surprise. Wheat movement is strong and harvest has begun - demand remains mostly routine. All these elements add up to a fairly weak outlook for basis values.

Rains moved across the Midwest providing much needed relief to US soybean growing areas. The rain relief has soybean futures down 15 cents this morning, despite much stronger than expected export sales. Sales came in at 710.5 TMT, the market was estimating sales of 300-600 TMT. Reports that soybean buyers are stepping to the sidelines and waiting for lower prices just really don't make sense considering last week's export numbers. Reports that canola in the eastern part of our state bloomed for only 8-10 days indicates lower yields in those areas. However, our canola bloomed for a very long time and we are hoping to see some phenomenal yields. Canola futures are lower this morning with soybeans and after yesterday's rally I suppose they are looking for another break. Crude prices are stronger, though, and that will hopefully provide some support to our oil crop markets.

Corn prices were lower on long liquidation spurred by rains falling to the Midwest and hopefully helping out some of the crop that is not completely dried out. Futures have been bouncing around either side of unchanged all morning and trade action has really been quite quiet. Export sales for the week were phenomenally sucky at -140.4 TMT. The market was expecting to see at least positive sales for the week at 100-300 TMT. Chinese corn production is expected to be higher with recent rains benefiting the crop. Additional reports of Asian buyers going to Brazil for their corn needs does not indicate that US export sales will get better any time soon.

Kayla Burkhart

Broker/Procurement

SunPrairie Grain

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1600 27th St SE | Minot, ND 58701

P 701.857.9322 | F 701.839.5515 | C 701.720.4682

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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