SunPrairie Grain Morning Comment

MINOT - Aug 23/12 - 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: 0-2 higher, market struggling, decent export sales but overall demand is quiet, more declines in Russian production estimates (Mpls Sept last trade 9.42 ¼, KC Dec 9.05)

Soybeans: 6-8 higher, ProFarmer tour continues to find lower pod counts, export sales ok (Nov last trade 17.36 ¼)

Corn: 3-5 lower, no fresh news to drive price direction, better yields found on third day of tour (Dec last trade 8.31 ¼)

Sunflowers: 0-5 lower, bean oil struggling a bit so far this morning, but stronger soybeans and crude could support sunflower prices

Canola: 5-10 higher, canola is the market that just won't quit as futures are climbing again this morning

Yesterday:

A lack of fresh news and recent price strength let profit taking come in and let prices finish mostly weaker yesterday, with the exception of some of the oilseeds. Sunflower prices were up another 25 cents/cwt, canola a was up a dime and flax saw nearby prices rise as well. The flax market is really showing that supplies are needed now and not so much later with the strong inverse that has been put in place. Soybean prices were down a nickel as profit taking after several sessions of strong gains hit the market. Corn was down four cents for the day with a lack of fresh news and reports of some better yields being found in areas letting prices drift lower. Wheat also finished the day a bit lower, 2-3 cents actually, due to rain forecasts for the US hard red winter wheat areas coming just in time to get the crop planted.

Today:

Grain futures are pretty mixed this morning but things look like they're trying to turn higher. Currently spring wheat and hard red winter wheat are just above unchanged. There is mixed news for the wheat market this morning and prices seem to be lacking real clear direction. Soybean futures are higher again this morning after posting new contract highs in the overnight session. Corn futures are weaker as the crop tour found better than expected yields on the third day. Canola futures keep on climbing as that market just keeps on going! The US dollar is a bit lower this morning and crude is about 40 cents/barrel higher. The Fed said yesterday afternoon that it is "preparing to take measures to boost the US economy" which is likely why we're seeing the US dollar a little weaker this morning.

Wheat futures are struggling a bit this morning to find price direction. On one hand, export sales were above expectations of 300-400 thousand metric MT(TMT) at 474.8 TMT. However, demand in general remains week and sales are nowhere near where they need to be to stay on pace with current USDA projections. On the other hand weather forecasts are improving for the US hard red winter wheat belt which needs rains to get this year's crop in the ground. Additionally, dry areas of Australia are forecast for rain as well. Some favorable news, though, is that Russian crop estimates keep on falling; making the market think that we will see more US exports later this year.

The November soybean futures contract hit new highs in the overnight session, turned lower this morning and has since gone to trade higher again. Currently prices are up about a dime as the market starts to think that the US could see a national yield of 35 bpa or less. The ProFarmer crop tour seems to only encourage the sub 35 bpa yield with its findings this week, continually showing lower pod counts as the tour moved about. Illinois and Iowa both had lower pod counts than expected and it is up for debate whether more rain will help or not as August, the critical crop development month, draws to a close.

Corn export sales for the week were nothing special, indicating that demand for US corn is still pretty dang weak. Sales came in at 325.4 TMT, the market was estimating 200-500 TMT. Brazilian supplies and abundance of feed wheat are keeping US corn export sales weak and will likely continue to do so if prices stay strong. Futures are struggling a bit this morning but stronger wheat and soybean prices might be enough to lift things higher as we are already off the overnight lows. As I mentioned above, the ProFarmer crop tour found some better than expected yields in its third day. The Illinois crop yield from the tour came in at 121.6 bpa which is about 5 bpa higher than the current USDA estimate.

Prices seemed a little mixed and confused when I came in about an hour ago. However, things seem to be gaining steam and it looks like we're headed towards higher trade for corn, beans and wheat for today.

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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