SunPrairie Grain Morning Comment
MINOT - Jul 29/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
Opening Calls:
Wheat: 10-12 higher as we continue to get negative news out of Russia
Soybeans: 5-7 higher exports are strong
Corn: 4-6 higher following the wheat market
Yesterday:
Corn and soybeans decided to follow wheat higher yesterday and both
managed to hold a higher close. Wheat market continues to gain on news
out of Russia and increasing European prices. It seems that the market
just wants to find reason to trade higher and is paying attention to the
worst of the worst news coming from overseas. There's no way at this
point to estimate how much production is going to be down due to drought
in the Black Sea region - so the market is following the worst possible
outcome. However, things are rarely as bad as they seem. What happens if
Russia has a crop and things aren't as bad as the market seems to think?
Like Raaper says "it's like WalMart...watch for falling prices".
Today:
Overnight trade was higher once again. I keep waiting to come into work
and see negative prices on the board but we keep pushing through. Spring
wheat futures were up 12 cents on September, corn up a nickel and beans
up seven. The dollar is getting whacked, adding support to grain futures
this morning. Wheat continues to freak out over news from Russia and
corn and soybeans are along for the ride. Crude oil is helping out as it
is up over $1.30 a barrel at the moment. Favorable US crop weather will
continue to put a lid on corn and soybean gains.
Wheat is the exciting market right now so maybe I'll start out with that
for a change. European milling wheat futures are going through the roof
and reaching new highs - which is allowing US wheat futures to do the
same. It's all about Russian production at this point. Like I said
earlier - there's no way to know for sure how much Russia has lost in
wheat production - but the market is taking the worst possible scenario
and running with it. Basis continues to disagree with higher futures
prices and continues to fall as futures gain. However - losing a nickel
in basis and gaining 20 cents in futures still leaves a pretty decent
net gain for the day. Exports for wheat were very impressive. Estimates
were 300-400TMT and sales were over double that at 919.9 TMT. A lower
dollar is no doubt helping prices and it seems like we have definitely
not lost demand as cash prices for wheat skyrocket. Railcar placements
are running behind but basis is not reflecting any sort of wheat supply
crunch at this point in time.
The ND wheat tour as of yesterday afternoon had stopped at 147 fields,
34 of them durum. Spring wheat is sticking in that 46bpa range and durum
at 38.9bpa. Central ND yields are coming in at levels above last year's.
Ben Handcock, executive VP of the Wheat Quality Council noted that
disease pressure is "almost nonexistent". He adds "we are either in one
of the best areas of the state or we have been very lucky in fields
surveyed". According to the report - some tan leaf spot disease has been
found but the crop is far enough along that damage is unlikely. Protein
is still up in the air but concerns are around as high yields usually
means low protein.
Soybeans are finding support from a weaker USD boosting exports. Weekly
export sales were 1,483 TMT and estimates were 1,000-1,200 TMT. Soybeans
will likely find strength today from export news. Corn is hoping that
China will continue to import additional US corn this year. However,
overall the local China crop is looking very good and domestic prices
have eased - making importing less necessary. The corn market is very
much watching US weather which is adding no stress on the crop. Exports
were 960.4 TMT versus estimates of 800-1,000 TMT.
Barley prices are being supported by the recent gains in wheat and corn
prices. Barley is also used as a feed substitute - and lower feed wheat
production could help increased demand for US feed barley. Keep an eye
on what's going on with corn and wheat to get an indication of what may
happen in the barley market.
As always you can reach me at Kayla.Hoffman
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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