SunPrairie Grain Morning Comment

MINOT - Aug 1/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Morning Outlook as of 8:45 AM CDT:

Wheat: 10-15 lower, prices struggle with row crops, ideas that Russia will have exportable supplies (Mpls Sept last trade 9.44, KC Sept 8.79)

Soybeans: 13-17 lower, profit taking slams the market today (November last trade 16.30 ¼)

Corn: 4-6 lower, profit taking, even though dry weather remains (Dec last trade 7.98 ½)

Sunflowers: 5-10 lower, bean oil under pressure, which lets sunflowers drift lower

Canola: 20-30 lower, futures sharply lower after yesterday's price surge at the close

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Yesterday:

Profit taking slammed the markets yesterday and wheat prices struggled the worst. Spring wheat lost 20 cents on the day and hard red winter wheat was down 30 cents (basis declines did not help, either). Wheat prices just saw major fund selling combined with weakness in the row crops and that let prices drift lower. Corn and soybeans did not do so badly when compared to the wheat markets. Corn futures were down nine cents for the day with slight profit taking and soybeans were down two cents for the day. Canola futures had a strange close yesterday. Futures were quiet most of the day but a surge at the end of the day had cash prices 35 cents/cwt higher. Everything else was pretty quiet for the day.

Today:

Well it looks like we're going to trade lower again today. Overnight trade saw futures a bit higher but we have since turned lower with pressure from profit taking and strong selling. However, we are also off of our lows of the night which is encouraging. Right now hard red winter wheat is down 16 cents and spring wheat is down 12 cents. Ideas that Russia may not ban exports have wheat prices in the US struggling a bit today. Corn futures are off this morning about eight cents on ideas that demand is being shut off with higher prices. Soybeans are seeing profit taking push prices lower as weather remains mostly favorable for stronger prices. The markets are also awaiting a statement from the US Fed that will hopefully announce measures to boost the economy.

Large US wheat crops and good yield reports out of Manitoba and Saskatchewan are also working to put pressure on wheat prices today. Canadian farmers are pleasantly surprised with their wheat yields and supplies are moving quickly from farm to market pipeline. Basis looks to remain shaky for spring wheat through harvest as movement stays strong. Also, there is chatter that maybe Russia will not embargo wheat exports. The Prime Minister says that Russia should have "sufficient exportable supplies". This means that perhaps US wheat will not see as much export business as initially thought. Adding weight to the market are reports that European production out of France and Germany is coming off better than expected. It seems that higher than expected yields are being reported everywhere.

There is really little news to report for the soybean market right now. Chinese demand has not yet shown signs of weakening, even with the sharply higher prices we have seen lately. Rain is in the forecast for areas of the Midwest which may be part of the reason why we are seeing lower prices this morning. However, it seems to be that profit taking is the primary reason for lower prices in the soybean market today. Crude futures are mildly supportive as they are about 40 cents/barrel higher and the US dollar is marginally lower today. Bean oil is off which means we could see flax, canola and sunflower prices struggle. Speaking of canola - futures are seeing a sharp correction after yesterday's wildly higher close.

The corn market is also seeing little fresh news this morning as it still remains all about weather. Volatility continues in this market as one day prices are focused on supply and the next they are focused on demand. Today, it seems, corn prices are focused on demand and the idea that there isn't any. Ethanol production and export numbers are expected to be pretty quiet for the week which will only add weight to the market. There are reports of early corn harvest out of Illinois. Low yield is being reported, as expected.

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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