SunPrairie Grain Morning Comment
MINOT - Jun 6/13 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:30 AM CDT:
Wheat is up 3-5 cents, US production concerns and higher corn and soybean prices help wheat futures bounce a little this morning (Mpls July last trade 8.20, KC July 7.46 ½)
Soybeans are 0-5 higher, old crop struggles but new crop is a bit higher after yesterday's weakness (Aug last trade 14.53 ¼)
Corn is 2-4 higher, ideas that some acres will be lost due to PP gives a bit of a price bump, export sales disappoint (July last trade 6.59 ¾)
Sunflowers are 5-10 cents higher, with stronger bean oil and crude prices, planting concerns could start to work their way into new crop prices
Canola is 10-15 cents lower, Canadian acres are planted, canola futures sell off recently after market feels futures have been overbought recently
*AOG Contracts*
If you have an Act of God contract with us and are/were unable to get your crop seeded, please let us know as soon as possible. Also, just a reminder, we need a copy of your FSA 578 forms on seeded and PP acres when they're available for all AOG contracts (HO Sunflowers, Victory Canola, commodity canola, flax and NuSuns). If you have any questions please let us know. Thank you!
Yesterday:
New crop grain prices had a tough day yesterday as forecasts called for improving weather that would allow for good crop development and for the final planting effort to be made. Outside markets were mixed for grain futures yesterday. The US dollar was lower, crude was higher but the stock markets were sharply lower. In fact, the DOW closed below 15,000 yesterday. Old crop soybean futures were a bit higher yesterday but we rolled from August to November futures. Basis values are now at +0.70 cents the November contract and cash prices lost only seven cents with the roll. Old crop corn prices were unchanged for the day but new crop prices struggled as the market feels that most intended acres will get in. Flax prices were down a nickel on the day and sunflowers lost a dime. Canola saw a heavy selloff on the futures board and lost another 25 cents/cwt. Wheat prices followed row crop weakness yesterday despite the later start to hard red winter wheat harvest and concerns about ND spring wheat planting. Spring wheat finished the day down a nickel and hard red winter wheat was down seven cents.
Today:
Grain futures are mixed this morning. Old crop corn and soybean futures are struggling to hold higher ground and have lost a few cents. Wheat prices finished the overnight session higher but now are just barely above unchanged as the day session opens up. For what it's worth - the US dollar is lower this morning and crude prices are up about 70 cents/barrel. There's a lack of fresh fundamental news for the grain markets this morning and it seems that futures are already speculating about what the USDA will say in Monday's weekly crop progress/conditions report. Export sales for the week were somewhat disappointing which may add some weight to futures markets. Other than that it looks to be fairly quiet for the grain markets today.
Informa Economics increased its 2013-14 global wheat production estimate by nearly seven percent in yesterday's report. The increase comes from the Black Sea Region which is expected to see a significant pickup in wheat supplies this year. Crop issues in the US are working against larger global production potential when it comes to pricing in the grain futures markets. The GMO wheat situation is still very prominent news in the US marketplace. Buyers of US white wheat are on the sidelines until the investigation is complete. The USDA believes that the GMO wheat on the farm in Oregon was an isolated occurrence and that the issue will be resolved quickly. Wheat export sales for the week surprisingly came in above estimates that ranged from 300-600 thousand metric MT(TMT) at 631.7 TMT. I think it's pretty safe to assume that the sales were DNS and HRW.
The soybean market is a bit nervous about planting but is overall confident about the US getting its acres seeded. Additionally, corn acres lost due to wet weather could very likely be switched to soybeans which has been contributing to soybean market weakness lately. Technical selling has also been prominent in the soybean market over the past couple of days which may contribute to today's weakness as well. Old crop futures are a bit lower - likely due in part to net export cancellations in that time period. New crop sales made up for the old crop cancellations, though. Overall soybean sales came in at 638.3 TMT, in line with market estimates that ranged from 300-700 TMT.
Canola futures have been sold off pretty heavily lately and some in the market expect that those losses could continue in nearby trade. It seems that futures had worked their way to an overbought situation and now we're dealing with the correction. The buying really started going when it didn't look like much of a crop was going to get seeded in Canada. However, the Canadian planting season went far better than anyone had expected. Focus will now turn to growth and development conditions. Of course, though, we do not want to discount the importance of the US soybean complex to the canola market. Falling or rising soybean prices will have an impact on canola futures as we move forward. For now canola will work through this selling until futures reach a level that reflects both higher than anticipated planting due to favorable weather and weather uncertainty as we move through the crop development period.
Many in the market feel that corn has lost/will lose less than two million acres due to the wet planting season. Some of these acres will be PP'd and others will switch to soybeans or another commodity. As I mentioned yesterday, though, the market is figuring 95 million corn acres at about 155 bushels per acre - that puts US total production at 14.7 billion bushels. That's a lot of corn. Of course, there is a lot that can happen to the crop between now and harvest and those yield results are in no way a certainty. Nearby weather remains fairly cool and wet in spots but in the next week or so forecasts are calling for a change in the pattern to warmer and dryer weather which will help push development along. The corn market is already looking forward to what the USDA will say in Monday's crop progress/conditions report. Export sales for the week were really disappointing for the corn market and it seems only old crop futures are taking note right now. Export sales were estimated to come in between 500-800 TMT and were reported at a dismal 158.8 TMT.
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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