SunPrairie Grain Morning Comment

MINOT - Aug 22/12 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Market Outlook as of 8:25 AM CDT:

Wheat: 5-7 lower, correcting with corn and soybeans, market relaxes for now about global/US supplies (Mpls Sept last trade 9.40, KC Sept 9.02 ¾)

Soybeans: 4-6 lower, correction after three sessions of substantial gains (Nov last trade 17.27)

Corn: 1-3 lower, better yield results on second day of ProFarmer tour (Dec last trade 8.37)

Sunflowers: 5-10 lower, soybean oil relaxing with crude and lower soybean futures

Canola: 20-25 higher, low yields reported in StatsCan report

Yesterday:

A combination of a little bit of everything worked to drive prices higher in the grain markets yesterday. Soybeans reached all time highs yesterday as low pod counts were found in the ProFarmer tour. We saw soybean prices finish the day nearly 50 cents higher. Canola, flax and sunflowers all followed suit and posted substantial gains in yesterday's trade. Sunflowers seem to have gotten a bit of a demand kick as we really saw prices pick up. Wheat prices were stronger for the day as spring wheat was up 13 cents and hard red winter wheat was up 31 cents as bids rolled to the December futures contract. Wheat prices were also supported by ideas of falling production estimates coming from the Black Sea Region. Corn saw gains of about 15 cents yesterday, taking cue from stronger wheat and soybean markets. Low yield estimates from the ProFarmer tour also helped to bump corn prices. The US dollar was also sharply lower yesterday and crude prices were higher.

Today:

We're having a bit of a correction in the grain markets today, with the exception of canola which is soaring higher again today. For now, though, we're seeing wheat prices down about four cents, falling with the corn and soybean markets. Soybeans are seeing prices relax a bit after three sessions of substantial gains. Soybean futures are down only a nickel right now, though, so it is not much to be concerned about. Corn prices are just under unchanged as the ProFarmer tour found some better than expected yields in areas yesterday. Canola futures are stronger today and we'll likely see higher prices, but gains will be limited by struggling US markets. The US dollar is recovering today and crude futures are down about 25 cents/barrel.

Wheat prices are struggling just a little bit today with ideas that US and global supplies are doing just fine for now. However, there is a lot going on that could change the global supply situation as we look toward long term. First off, the US southern plains are pretty dry which could hamper hard red winter wheat planting prospects. Secondly, Black Sea Region production is somewhat up in the air right now as estimates keep on declining. Just how big of a competitor will the Black Sea Region be this year? Another factor is dryness in Australia. The Australian wheat crop could really use some rain right now to help the crop recover. Strong spring wheat selling, that is expected to continue well after harvest, will likely keep basis bids on the defensive side for a bit longer than we're used to after harvest. StatsCan pegged Canadian spring wheat yield at 42.3 bpa and winter wheat yield at 65.4 bpa. Barley yield was at 64.7 bpa.

As I mentioned above, soybeans are correcting today after substantial gains over the past few trading sessions. The ProFarmer tour has continued to find lower pod counts on its second day, but the market is paying that news little attention at the moment. Soybean prices will likely remain volatile as we move forward. News that South American acres are expected to increase is viewed as unfavorable to US prices. StatsCan estimated their soybean yield at 37.9 bpa. Canola prices are stronger this morning - perhaps that has something to do with StatsCan estimating yields at 1,640 lbs/acre. A struggling US soybean complex, though, could limit canola gains. Falling crude prices do not help much, either.

Better corn yields than what the USDA has currently estimated were found on the ProFarmer tour's second day in Indiana. However, lower yields were found in Nebraska. The corn market seems to be focusing on the Indiana news, though, and is trading just a little bit lower today. There's some speculative profit taking likely happening here as well but prices really are not performing too poorly. News that China is expecting record production this year could be viewed as unfavorable as the US gets really excited when China comes in to buy corn.

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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