SunPrairie Grain Morning Comment
MINOT - Jul 12/13 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:55 AM CDT:
Wheat is up 2-5 cents, recovering after yesterday's losses, winter wheat harvest pressure eases (Mpls Sept last trade 7.72, KC Sept 7.10 ¾)
Soybeans are down 13-15 cents, strong new crop production expected, estimates weigh on market (Nov last trade 12.77)
Corn is down 8-10 cents, large US production estimates, higher than expected US carryout for 2013-14 (Sept last trade 5.53 ¼)
Sunflowers are down 5-10 cents, struggling bean oil and falling soybeans have market showing losses
Canola is down 10-20 cents, futures board continues selloff that started yesterday - Canada has nearly 20 million acres seeded
Today:
Sorry there have not been updates the past couple of days, thankfully there is not too much fresh news that we have missed out on. Outside markets are quiet this morning with the US dollar slightly higher and crude prices up about 50 cents/barrel. Grain markets are mixed with corn and soybeans lower and the wheat markets higher - the exact opposite of yesterday's price direction. The grain futures are focused mostly on weather at the moment, which looks pretty good for the crops for the weekend. Yesterday's USDA report was viewed as fairly neutral and has had little market impact, but I'll cover the basics below. Wheat futures are higher despite lower corn and soybean markets this morning as the markets work to recover some of what was lost yesterday.
The USDA decreased US and global carryout estimates from the June report for both 2012-13 and 2013-14. Despite the decreases, though, wheat prices still fell yesterday. I think it may have something to do with production increases in the US, which came mostly from the hard red winter wheat crop. The USDA put US HRW production at 0.793 billbu, up from 0.781 billbu estimated in June and well above what the market was expecting to see (0.773 billbu). The USDA put the "other spring wheat" production estimate higher than what the market expected to see at 0.513 billbu. The USDA left its estimate of Russian production unchanged at 54 million metric MT(last year was 37.72 MMT, hence the reason for expectations of strong export competition from Russia this year) but some feel like this estimate is too aggressive given some unfavorable growing conditions across some areas in Russia. The market continues to keep an eye on developments out of Egypt. Egypt has said it has adequate stocks to last until November and will not need to buy wheat in the near term, citing high prices. However, the recently ousted president said that Egypt had wheat stocks to last only a couple more months - so we'll see what happens. Spring wheat basis values may begin to work their way lower as farmer selling has picked up across the state, though not necessarily in our area. Strong sales give buyers the coverage they need and bids typically back off, which we could probably see in the coming days.
Soybeans are showing double digit losses this morning after posting gains of about a nickel yesterday. The USDA did not do too much to the soybean balance sheet yesterday but US production was slightly increased - yields were left unchanged. The US soybean crop is expected to be 3.42 billion bushels, above June estimates of 3.39 billbu. The US 2013-14 carryout also increased to 0.295 billbu (0.265 est for June). Global carryout estimates were also increased. Despite higher production estimates, soybean prices rose a bit yesterday due to forecasts for hot and dry weather to US soybean growing areas over the next couple of weeks. However, that is not helping prices out today and perhaps soybeans are seeing a bit of a delayed reaction to yesterday's estimates of bigger than expected US production.
Corn prices are also having a tough time this morning as losses have now extended past ten cents in most futures months. The market seems mostly focused on weather, which looks pretty good through the weekend for many growing areas. There is talk of dryness to some spots which could become more of a concern as we get closer to pollination. In general yesterday's report was viewed as neutral - we were expecting to see bigger production due to higher yield estimates, but that didn't happen. Yield estimates were left unchanged but harvested acres were decreased, which put US production at 13.95 billion bushels, below the June estimate of 14.005 billbu. This is well above 2012-13 production of 10.780 billbu. US carryout was slightly increased, though, as demand numbers were cut. Global carryout numbers were slightly decreased from the June estimate.
It looks to be a sharply lower day for the corn and soybean markets. However, wheat looks to hold its ground and will hopefully maintain its strength against falling corn and soybeans as the session progresses.
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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