SunPrairie Grain Morning Comment
MINOT - Jul 18/13 - 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 0-2 cents, spring wheat struggles with good conditions, but export sales for the week are decent (Mpls Sept last trade 7.55 ¼, KC Sept 7.04 ¼)
Soybeans are 6-9 lower, weak global vegetable oil demand and favorable weather forecasts push soybeans further down (Nov last trade 12.74 ¼)
Corn is down 4-6 cents, weather forecasts turn cool and wet for the weekend which puts downward pressure on prices, strong export sales should be encouraging but are doing little (Sept last trade 5.33 ½)
Sunflowers are unchanged, bean oil is slightly higher this morning but is doing little to boost prices for sunflowers
Canola is 20-30 cents lower, futures are sharply lower with a falling soybean market this morning, further selling in canola prices
Yesterday:
Grain prices again traded weather yesterday and since weather forecasts looked favorable for crop conditions, prices were a bit lower yesterday by the end of the day. Corn is entering pollination so weather is the biggest news for that market right now. However, some in the market seem to think that crop conditions could decline again next week as hot, dry weather could have negatively impacted some of the US crop. Old crop soybean prices finished the day a bit higher due to tight old crop supplies. New crop soybeans, though, did not want to trade higher yesterday because of good weather forecasts and the potential for good US production. Wheat prices started the day higher but then settled lower as corn and soybean prices falling off was just too much for wheat futures to work against.
Today:
Again there is little fresh news for the grain markets to trade off of. Outside markets are having very little, if any, influence over grain prices today. The US dollar is slightly higher and crude prices are up about 43 cents/barrel at the moment. These grain futures continue to focus on US weather and 2013 production potential. Even decent export demand news is doing little in the way of supporting prices this morning.
Spring wheat basis may begin to crumble here pretty soon as movement has really picked up in the eastern part of our fair state and into parts of Minnesota. Buyers have been seeing steady offers from elevators and end users are getting good coverage. If this continues we could see local spring wheat basis start to crumble a little as buyers relax their bids. Plus, harvest is on its way, which is typically when we see a price decline due to the seasonal pickup in movement. On the futures side of things prices continue to focus on weather and Egypt. Egypt has been giving mixed signals but the general belief is that there are only two months' worth of wheat supplies available in Egypt right now. Even if Egyptian harvest goes well, some still fear that a food shortage should occur if Egypt does not purchase in wheat. The issue is that it could be financially difficult for Egypt to make large wheat purchases at this time. However, there are reports of Egypt looking to the Black Sea region for some supplies right now. Even if Egypt doesn't buy from wheat from the US, demand still looks pretty decent for US wheat. Export sales for the week were at 996.6 thousand metric MT(TMT) which is just below aggressive estimates that ranged from 1000-1300 TMT. Have we found some demand at lower prices? A private market analyst increased its estimate of the EU crop by 5% from last year's production which only adds weight to the global production balance sheet.
Soybeans are showing some double digit losses on the November futures contract this morning. General selling interest spurred by favorable weather forecasts seems to be the reason for lower corn and soybean prices again this morning. Soybeans are finding additional weakness from overall poor global vegetable oil demand. Export sales for the week came in just above the high end of estimates that ranged from 350-700 TMT at 702.3 TMT. Canola futures are sharply lower again this morning as the Canadian crop looks good. For those of you who don't know - Canada planted 19.75 million acres of canola this year (but is about 8% lower than last year's acres). That's still a lot of canola though and prices, since planting season, have been in a downward correction after building themselves up all winter and spring.
The corn belt is seeing some issues with hot and dry weather in western areas but it does not seem to be enough to generate much concern. Also, that looks to change this weekend as forecasts turn cool and wet which would be considered a good thing for the developing crop. The market will also be keeping an eye on forecasts in areas that are entering pollination. Export sales for the week were the best we've seen in a long time. However, the market was expecting to see strong sales since they were previously announced. In other words - the market was not the least bit surprised to see strong weekly export sales this morning, even though they were well above estimates. Export sales estimates ranged from 600-950 TMT and came in at 1743.7 TMT. The majority was new crop sales to China, as I mentioned above. Even though strong demand was expected we should be excited to see these numbers since it could mean that we have finally found some demand in this market at current prices.
Below is an article that was sent to me regarding an outlook on crop prices and global population growth sent to me by CHS Hedging analyst Chris Steinhoff, for those of you who would like some light reading.
http://agfax.com/2013/07/17/bearish-future-forecast-for-grain-based-agriculture/
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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