SunPrairie Grain Morning Comment
MINOT - Oct 6/14 - 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 10.06.2014:
Wheat is up 4-6 cents, short covering means buying interest for wheat futures, pushes them higher {Mpls Dec last trade 5.48, KC Dec 5.73 ¼}
Soybeans are 15-17 higher, slow harvest pace and Brazilian dryness result in a small rally for the morning {Nov last trade 9.29 ¼}
Corn is up 4-6 cents, rain forecast over the next couple of weeks means anticipated harvest delays {Dec last trade 3.27 ¾}
Sunflowers are up 20-30 cents, soybean oil is rallying pretty good with the soybean market
Canola is 20-30 higher, up with the soybean complex, crude lower though and that could limit gains, harvest pressure easing up
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I'm back! Sorry for the hiatus, again! Grain futures are rallying this morning so I'm happy to get something written today. The rally is mostly weather related as precipitation combined with low temperatures means slow drying times and slowed harvest activity. Additionally, more rains in the forecast make it look like this corn and bean harvest could continue to drag on at a snail's pace across the US. The US dollar is lower this morning which is also supporting grain futures to start today. Crude prices are lower this morning and that may limit gains in the grain futures markets, especially the oil crops.
Wheat futures are rallying this morning, likely taking cue from stronger row crops. A decrease in harvest pressure as spring wheat harvest wraps up could also be providing some support. Canadian crop estimates decreased in the most recent StatsCan report which will also work to make wheat futures pretty excited. Ample global supply will continue to weigh on things, though, and a drop in Russian prices is pretty unfavorable as well. Russia and the Black Sea Region in general are providing some pretty tough competition to the US wheat market and will continue to do so for this marketing year.
With the spike in durum prices we are seeing a lot of questions on new crop durum. I have a feeling that this durum price spike could be limited in time and I'll share with you my reasoning. First off, Canada still has a lot of last year's durum {good quality} that needs to move but hasn't been able to do so due to rail problems. When that crop can break loose and get to the mills we will probably see prices relax. Secondly, there is a large desert durum crop that will be harvested in about March that the market will be eager to scoop up. If that crop comes off at good quality and gets to end users we will likely not see the strong prices that we are right now as the desert durum crop will help make up for what the market is lacking right now. Looking a little further down the line, if durum acres increase substantially this year and the crop comes off at decent quality, what do you think will happen to prices? Of course, anything could change this outlook but I'm just sharing with you what I see right now.
Soybean harvest is chugging along, expected to be about 20% complete which is behind average pace of 40% complete at this time of year. So you can see the reason for our price spike today, we have a big crop coming but it's slow getting it out of the field and into the bin. A private market analyst increased its US soybean production estimate on Friday, pegging yield at 48.5 bpa, which is almost 2 bpa higher than the current USDA estimate. Despite that news, though, prices are higher on soggy US weather and dry Brazilian weather and , frankly, we could use a day of higher prices after all the recent negativity.
The private market analyst also increased its corn yield estimate, putting it at 176.4 bpa, compared to the USDA's current estimate of 171 bpa. After seeing these estimates, and others, the market is becoming more and more convinced that the USDA will have to increase its crop estimates. Corn prices are higher anyway, with rain forecast over the next couple of weeks and harvest chugging along at a pretty slow pace. The USDA is expected to estimate harvest at 20% complete, compared to a 31% average pace.
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
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