SunPrairie Grain Morning Comment

MINOT - Aug 7/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlook as of 8:40 AM CDT:

Wheat: 0-2 higher, market tries to trade higher with corn but trade is light and quiet and it could be hard for prices to sustain gains (Mpls Sept last trade 9.37 ¼, KC Sept 8.97)

Soybeans: 6-8 higher, prices recover after yesterday's losses as speculative buying hits the market (November last trade 15.91 ½)

Corn: 0-2 lower, prices climbed higher in the overnight session but are now fading, crop conditions decline by another percent (December last trade 8.05 ¼)

Sunflowers: 5-10 higher, rallying with soybeans and crude, little else to drive direction

Canola: 10-20 lower, futures play catch up with yesterday's losses as Canadian markets were closed

*VOM in New Crop Barley*

We are starting to see some VOM pop up in some new crop barley. Please bring in a sample for us to check as soon as possible or call us for bin probing once it has been harvested. The VOM has been spotty with some areas being worse than others. Thank you!

Yesterday:

Weekend rains spurred selling pressure in the grain markets yesterday, especially for the soybean market. Soybeans finished the day down 44 cents as funds pushed things lower. Wheat followed soybeans down for much of the session but prices climbed back by the end of the day. Spring wheat finished down a nickel and winter wheat was unchanged for the day. Canola prices sagged despite the fact that futures weren't open. Processors took protection as soybeans were down so heavily and that resulted in canola cash prices finishing the day bout seventy cents lower. Sunflowers lost 15 cents for the day and flax was down a dime. Corn did ok comparably, losing only two cents on the day.

Today:

Grain futures opened the overnight session a bit lower but have since recovered. Trade has been fairly quiet and light so things are looking pretty uneventful for today. Spring wheat futures are currently unchanged and hard red winter wheat is up about four cents. Wheat futures continue to look to corn for direction, with some support coming from dryness in major global production areas. Soybeans are posting gains of about a dime so far this morning. The gains in the soybean market seem more like "bargain buying" by the speculators than anything. Outside markets are also supportive with crude up over 50 cents/barrel and the US dollar trading lower. Corn futures are a couple cents higher so far today, likely due in part to the fact that the crop is now rated 50% poor to very poor. The USDA has its monthly S&D report released on Friday.

As I mentioned above, wheat looks to follow corn direction with some support coming from dryness across global growing areas. There is also major questions over what Russia is going to do as far as exports go - will they or won't they put on an export ban? One firm in Russia cut its production and export estimates substantially which has many hoping that Russia will in fact put on an export ban. Russia is to comment on the subject tomorrow. The US is also hoping for rains to hard red winter wheat growing areas so the crop can get planted. Spring wheat harvest is, according to the USDA, 47% complete which is well ahead of the average pace of 12% complete. We are starting to see some scab in spring wheat, which means we could have some VOM in there as well. US barley harvest is reportedly 30% done, ahead of the 11% average.

Soybeans are posting decent gains this morning, recovering some of what futures lost yesterday in what is being called "bargain buying" by the speculators. Crop conditions were unchanged for the good to excellent category at 29%, however more of the crop did fall into the poor/very poor rating. Yields are expected to average somewhere in the upper 30s for the US, which is well below original USDA estimates. Canola prices are really struggling this morning after being closed yesterday and playing catch up with what the US markets did in yesterday's session. Soybean oil and crude oil futures are higher this morning which will provide some support to the sunflower and flax markets as well today.

The corn crop is now rated 50% poor to very poor, compared to a 48% rating in that category last week. There is little that can be done to help this corn crop recover at this point. Good to excellent ratings for the corn crop dropped by one percent this week to 23% good to excellent. Brazilian corn crop estimates are coming in much larger than current USDA estimates. Will we continue to see US export business go to South America as supplies remain ample and prices are cheaper? It is likely.

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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