SunPrairie Grain Morning Comment
MINOT - Jul 9/13 - 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 up 7-12 cents, following corn and soybean markets higher, little reason for wheat to trade sharply higher on its own (Mpls Sept last trade 7.68, KC Sept 7.00 ½)
Soybeans are 14-16 cents higher, slightly disappointing crop condition report as ratings did not increase as expected (Nov last trade 12.67)
Corn is up to 8-10 cents, follow through buying interest from yesterday, some dryness concerns in the southern corn belt (Dec last trade 5.08)
Sunflowers are unchanged, bean oil fairly quiet despite the rally in soybeans
Canola is up 5-10 cents, futures stronger with soybean complex, falling crude oil could limit gains
Yesterday:
Grain futures rallied pretty well yesterday but the impact on our cash prices was not much as we had to counter Friday's losses since we did not send out markets that day. So despite higher prices in the markets, our cash prices were not too exciting yesterday. Soybeans were two cents higher and corn was up a penny. Soybeans put in a pretty good rally yesterday, wiping away losses experienced Friday while not many were in to keep an eye on what markets were doing. Corn futures also saw gains yesterday. Wheat cash prices actually saw losses with spring wheat down nine cents and hard red winter wheat down seven cents. Spring wheat futures were lower yesterday with favorable crop conditions weighing things down, but HRW futures were higher on the day.
Today:
It's another strong start to the day for grain futures as it seems buying interest that started yesterday has continued into today. Outside markets are providing little, if any, direction today as there isn't much going on. The US dollar is slightly higher and crude prices are about 40 cents/barrel lower, so it's a fairly quiet day in those markets. Weather forecasts and crop conditions are the main price drivers for grain futures but other than that there is not much going on.
Wheat prices are following stronger corn and soybean markets. Harvest delays for winter wheat in areas could also be providing some support to those markets. The USDA pegged US winter wheat harvest at 57% complete, which is seven per cent below the five year average. Harvest pressure could be starting to lift as we enter the last half and harvest moves out of the top producing state of Kansas. Spring wheat crop condition ratings will continue to keep a cap on that market. The crop ratings jumped four percent this week to 72% good to excellent, which is six per cent above last year's ratings. The expectation for high ratings is what kept spring wheat prices from finishing higher in yesterday's session. In global demand news Chinese imports are higher than they were last year, which is encouraging. However, the market is keeping an eye on the Black Sea Region as export competition from that region is expected to be high this year. Additionally, unrest in Egypt creates uncertainty about their wheat purchasing abilities. There is little doubt that Egypt will need to purchase wheat as supplies are thought to be short but with political unrest it's difficult to say how Egypt will move forward.
US barley conditions are 66% good to excellent which is a two per cent drop from last week's ratings. However, the crop is rated better than last year's 57% good to excellent.
The crop progress and conditions report released yesterday afternoon is considered to be slightly disappointing for the soybean market. In general we were expecting to see an increase in soybean crop condition ratings and they were instead left unchanged at 67% good to excellent. While that is a great crop rating (especially when you consider that last year's crop was rated 40% g/eat this time), it just wasn't the increase that the market was expecting. Also helping to boost soybean futures to double digit gains today is the sailor strike in Argentina that is likely delaying exports.
Corn prices are higher again this morning as follow through buying interest from yesterday continues. Condition ratings could limit gains though as they again increased this week. The US corn crop is rated 68% good to excellent which is up one per cent from last week and well above last year's crop ratings at this time of 40% good to excellent. Iowa and Minnesota crops remain a concern but overall the US crop seems to be looking pretty good. Because of that fact many analysts are predicting lower corn prices. I'm seeing that some market analysts are forecasting December 2013 corn futures to fall below $4.50, which with current local basis levels would put cash corn at $3.65. Of course, basis can always change. There are some dryness concerns in US areas though, especially in the south, as corn enters pollination. So weather remains critical at this point to crop development and in turn market prices.
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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