SunPrairie Grain Morning Comment

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

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Morning Outlook as of 8:35 AM CDT:

Wheat: 12-15 higher, spillover support from the row crops, tightening global supplies with decreased Black Sea and Australian production (Mpls Sept last trade 9.81, KC Sept 9.04)

Soybeans: 20-22 higher, tight stocks work to pull soybeans higher, low moisture expected until about Sunday/Monday (November last trade 15.90 ½)

Corn: 5-8 higher, renewed buying interest from the commercial side of the market pulls prices higher (Dec last trade 7.84 ¼)

Sunflowers: 5-10 higher, bean oil and crude prices are marginally higher and may pull sunflowers along

Canola: 20-30 higher, canola is up with the US soybean market and recovering after yesterday's lower day

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Yesterday:

Better than expected rains to Iowa spurred liquidation in the corn and soybean markets. Corn finished the day down 12 cents and let prices fall below seven dollars. Really, really bad export sales for corn also kept prices to the negative side throughout yesterday's trading session. Selling also occurred in the soybean market and we saw prices fall 48 cents to below fifteen dollars again. Flax and canola prices were struggling with the falling soybean markets and we saw flax fall off a dime and canola lost another 55 cents. Wheat followed the row crops lower and markets were also pretty worried about consumptive demand and whether or not that might pick up. By the end of the day spring wheat was down 21 cents and hard red winter wheat lost 14 cents.

Today:

It looks like we are going to end the week with grain prices trading higher. We'll likely finish out the week lower than what we started, but at least we are not seeing the same price action we saw Monday/Tuesday. If grain futures do finish lower this week it will be the first time since Mid-June that they have done so. Right now wheat prices are up about 15 cents, corn is up 12 and soybeans are 28 cents higher. The US dollar has been bouncing around both sides of unchanged but right now is lower. Crude prices are only 22 cents/barrel higher at the moment. There is not much new favorable news to drive prices higher. Ideas that Asian buyers are turning to Indian and Pakistan for their grain (prices are cheaper) will not be supportive to prices, either. Increased chances of moisture starting Sunday night and going into next week will keep corn and soybean futures on edge.

Wheat is finding some spillover support from the row crops this morning. Tightening global stocks will keep prices from falling off too far, also. However, high US prices is pushing Asian demand to India and Pakistan as prices over there are cheaper. Sure, they do not have as much grain to export, but what they do have comes at a lower prices than bringing it out of the US right now. On the other side of things, though, North Dakota spring wheat yields are expected to be higher than they were last year, according to the ND spring wheat tour that was out and about this week. Additionally, Canadian crops are reportedly looking pretty good and are rated 84% good to excellent. StatsCan will have its report out August 22nd. North Dakota durum yields are also expected to be higher this year says the ND spring wheat tour.

Tight stocks are working to push soybean prices back up today after we saw lower trade yesterday. Also, lower moisture forecasts throughout most of the weekend work to raise prices today as well. However, next week looks to bring increased chances of precipitation and August is the critical month for soybeans. So we could see somewhat of a market correction next week if we suck some of this weather premium out. Canola futures are sharply higher this morning with the soybean market. Sunflowers should also see some gains today if bean oil can hang onto its strength.

The corn market is seeing some renewed commercial buying interest after this week's declines. However, Monday is expected to show further reductions in US crop conditions, despite rains benefiting some of the surviving crop this week. Crop conditions and lower US production/harvested acres will remain the biggest factors in the corn market as we move forward.

Have a great weekend -

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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