SunPrairie Grain Morning Comment
MINOT - Sep 4/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 9:20 AM CDT 09.04.2014:
Wheat is mixed, spring wheat lower but hard red winter wheat is higher, trying to recover after yesterday's losses (Mpls Dec last trade 6.07 ½, KC Dec 6.18 ¾)
Soybeans are down 14-16 cents, large new crop expectations, thoughts Nov futures could dip down to $9.50 (Nov last trade 10.05 ¼)
Corn is 5-7 lower, large crop estimates and an overall lack of fresh supportive news (Dec last trade 3.45 ½)
Sunflowers are unchanged, bean oil is slightly higher despite the sharp losses in the soybean meal and soybean futures markets
Canola is 20-30 cents lower, sharp selloff in the futures board this morning with the lower soybean market
Futures prices are continuing to get hammered lower this morning, extending yesterday's losses. Expectations for huge US corn and soybean crops coupled with relatively expensive prices in the global marketplace has futures sinking. There are some wet weather and frost concerns out there but the market seems to be shrugging them off, saying that even an early frost would not be hard enough to cause widespread damage to the maturing crop. Crude prices are about 70 cents/barrel lower and the US dollar is higher as news that the European Central Bank dropped interest rates (which can be indicative of a weak economy) provides support.
Wheat futures tried to come up off of yesterday's losses in the overnight session but have since turned around with further technical selling pushing futures lower. Spring wheat is down about three cents at the moment, but hard red winter wheat futures are hanging onto gains of about a penny. I'm not sure those will hold long with the other two wheat markets trading lower. One would think the consistent rains to the biggest spring wheat producing state, delaying harvest and likely impacting quality would at some point have an impact on prices. However, that does not seem to be the case. US wheat continues to get snubbed in the global marketplace...apparently Egypt was looking for wheat and the US didn't even make an offer, knowing prices were too high. With lower row crop prices it is hard for wheat futures to justify trading higher.
New crop production expectations are keeping soybean futures lower again this morning. Some think that there could be up to 50 cents to come out of the market, and I can't say I disagree with that, especially if this crop makes it to the bin. Also weighing on things are reports that Argentinean farmers are hanging onto their crop, with nearly 50% left of last year's crop to market. At some point they're going to need cash flow and those soybeans will need to be sold. One little glimmer of hope is the expectation for Chinese farmers to plant fewer acres next year as other crops are more profitable, indicating that China could see increased demand for US beans as we move forward.
The corn market is dropping as there is a lack of supportive news to push things higher. I did just read of an export sale for this year but the market does not seem to be getting excited about that at all, looking at what is in the field more than what's being sold. There is some chatter about an early frost but as I said above, the market does not think that an early frost would be detrimental at this point. Basically, many believe the crop will make it to make it to maturity before it freezes too hard.
Kayla Burkhart
Broker/Procurement
CHS SunPrairie
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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