SunPrairie Grain Morning Comment
MINOT - May 30/13 - 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 is 2-9 lower, finding of GMO white wheat field in Oregon has market concerned about US exports (Mpls July last trade 8.12 ¾, KC July 7.41)
Soybeans are down 2-7 cents, selling continues, old crop demand slips (Aug last trade 14.23)
Corn is 3-5 lower, planting wraps up in Eastern Corn Belt, market ignores wet weather to WCB for now (July last trade 6.61 ½)
Sunflowers are down 0-5 cents, bean oil quietly lower this morning after closing sharply lower yesterday, falling crude market doesn't help
Canola is down 10-15 cents, with falling soybean complex, crude futures
Yesterday:
Weather and the USDA weekly crop progress report were the main focus for the grain markets yesterday. Funds doing their thing also had an influence on prices. New crop corn prices were higher yesterday as concern about whether or not supplies will be ample enough to make up for tight old crop stocks surface. Old crop corn futures were lower yesterday as futures were pushed lower by weakening demand. Chinese cancellations of an old crop soybean purchase had that market on edge yesterday. Worries that China could cancel new crop shipments spread into the new crop futures months as well. Canola, flax and sunflower prices were all lower with the fall in the soybean complex yesterday. Wheat prices ignored action in the row crop markets and performed ok yesterday. Spring wheat gained nine cents as the market focused on delayed planting in the top producing state of ND. Winter wheat followed along, somewhat reluctantly, finding strength from declining crop conditions.
Today:
Grain futures are lower across the board this morning as profit taking again hits the markets. Wheat futures are being sharply hit by some GMO news that surfaced yesterday but spring wheat continues to hold strength against the two falling winter wheat markets. Corn and soybean prices worry about demand and planting as the focus stays on weather for those markets. Outside markets are mixed as the US dollar is lower again this morning, but so are crude prices. The weekly export sales will be released tomorrow, a day later than usual, due to Monday's Memorial Day holiday.
One farm in Oregon has caused quite the uproar in the wheat market over the past day or so. GMO white wheat, reportedly from a trial that was completed in 2005, was found growing on a farm in Oregon. The result has been cancellations of Japanese tenders of white wheat and European buyers are talking about testing US white wheat shipments for GMO wheat. What will this do to our demand? Will we scare off other buyers? As you know there are currently not any GMO approved wheat varieties grown in the US as many buyers do not want to consume GMO wheat. This one farm in Oregon could have a big impact on the US wheat market, especially for white wheat. Hopefully it's an isolated incident and the GMO wheat can be contained. Wheat futures are reacting to the news and demand fears this morning.
Harvest has begun in southwest Oklahoma and reports are of high protein and good test weight. Yields range from 20-35 bushels per acre. Progress should pick up in the next week or so. Areas of Kansas and Oklahoma have been receiving rain recently. The rain is falling too late to some areas but is beneficial to those areas that are not quite at maturity. Spring wheat prices are not falling as much as the winter wheat markets right now and it seems that market continues to find its strength from planting delays. However, it should be noted that global production should be ample enough to make up for issues in the US this year. A short spring wheat crop in the US may not have a huge impact on prices as supplies will be found elsewhere.
Down goes the soybean market this morning as it seems renewed profit taking is pushing prices lower. Losses are about a dime across the board for soybean futures right now. Concerns about Chinese demand could be the main reason for selling pressure right now. China cancelled an old crop purchase and now the market is concerned that we could see more cancellations and that they could go into new crop. Old crop demand is also fading as processors found some product and are relaxing bids. Additionally, Brazilian exports look to remain strong through July, which is a longer than normal export period. Brazil had a big crop this year, they're looking to move it and the result is more Brazilian soybeans competing with US beans in the export market.
Corn is just really uncertain about what it wants to do right now. There is chatter that as many as three million acres of corn could be switched to other commodities due to late/delayed planting and wet weather. Three million seems a bit high to me considering that most of the Eastern Corn Belt is wrapping up on planting right now. The Western Corn Belt is where we will see acreage reductions as that's where rain has really slowed progress. Even with a three million acre reduction, though, we could still produce a crop of over 13 billion bushels if yields come in where expected. Old crop producer selling is reportedly picking up in areas where planting is complete which is putting weight on old crop futures markets and temporarily easing tight supply concerns. The market will continue to keep an eye on planting progress and weather as we move forward. We do need a good corn crop to make up for tight supplies this year.
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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