SunPrairie Grain Morning Comment
MINOT - May 10/13 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:35 AM CDT:
Wheat is 4-6 cents lower, markets relaxing in front of USDA report, following corn lower (Mpls July last trade 8.21 ½, KC July 7.76)
Soybeans up 1-3 cents, tight old crop supplies and strong demand are enough to keep prices excited (July last trade 14.11)
Corn is 3-5 cents lower, waiting for USDA report, lower after yesterday's aggressive price action (July last trade 6.46 ½)
Sunflowers are down 0-5 cents, lower with bean oil
Canola is unchanged, sharply lower crude prices could result in losses but a steady soybean market may limit them
Yesterday:
Grain markets started the day out fairly quiet but headed higher and kept on climbing as the session progressed. Wet weather in the forecasts a few days out combined with anticipation for favorable news in today's monthly USDA S&D report. Corn futures led the way higher and finished the day up 15 cents and back over six dollars for local delivery. Soybeans followed suit and posted pretty decent gains themselves of 18 cents/bushel with old crop tight supplies being the main market factor. Canola and sunflowers followed higher soybean prices. Wheat did not want to be left behind and took cue from rising corn and soybean markets. The hard red winter wheat futures performed the best of all, gaining 19 cents as impacts of recent cold weather on the crop still need to be assessed. Spring wheat was up nine cents on old crop cash prices for the day.
Today:
Things are pretty quiet in front of today's USDA monthly S&D report which will be released at eleven. There are not any major changes expected in today's report - but as I always like to remind you, the USDA loves to surprise us with these reports. Yesterday's little rally seems to have grain markets working their way lower this morning as well. Outside markets are not very helpful as the US dollar is higher and crude prices are down over $2/barrel at the moment. It's tough to say what today's price outlook is with the wildcard of the USDA coming out today.
Fundamentally there is some reason for wheat prices to trade lower today. Dry areas of the Black Sea region and Australia are either forecast for rain or have seen some recently. This could help to ease up any concerns about dryness. The USDA report is not expected to do much for wheat today - we could see 2012-13 ending stocks rise just slightly but the marketplace in general seems to think they'll be left unchanged from last month's estimate of 731 million bushels. Estimates for 2013-14 carryout vary but overall it seems the market is expecting to see those estimated at about 650 millbu. Global ending stocks are expected to remain abundant for 2012-13 but may decrease just slightly from last month's estimate.
Soybeans are expected to see 2012-13 carryout decline from last month's estimate of 125 millbu. The decline is expected to be only a couple million bushels, but some in the marketplace are estimating that ending stocks could be chopped all the way down to 100 millbu. If that's the case we could see a pretty good price spike to the soybean markets, especially old crop, today. Ending stocks for 2013-14 are expected to be nearly double of this year's at about 240 millbu. Global ending stocks for this year are expected to decrease only slightly - no major changes are anticipated. Argentine harvest is reportedly about 80% done but farmers there are not heavy sellers at the moment, meaning that there will be a lot of supply to sell as we move forward.
The corn market is relaxing quite a bit after yesterday's unexpected jump in prices. Thankfully we're still keeping the majority of yesterday's gains. Corn is expecting to see a decline in 2012-13 carryout estimates from last month's 757 millbu estimate. The market seems to be expecting a number around 750 millbu from the USDA today. Global stocks for 2012-13 are expected to decline, but only slightly. I think what will be more closely watched is next year's ending stocks estimate...which is expected to increase substantially to nearly 2 billion bushels (market is saying 1.99 billbu). The market is expecting to see reductions in US yields from 3-5 bushels per acre. Argentine harvest is about half done and no major revisions are expected to their production estimates.
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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