SunPrairie Grain Morning Comment
MINOT - Feb 6/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:40 AM CDT:
Wheat is up 5-10 cents, spring wheat leads the way higher, strong wheat export sales & buying interest push futures higher (Mpls March last trade 6.39, KC March 6.55 ¼)
Soybeans are up 8-10 cents, ideas USDA will decrease US carryout in Monday's monthly report (March last trade 13.28)
Corn is up 2-4 cents, much better than expected export sales helps lift futures (March last trade 4.45 ¼)
Sunflowers are up 10-15 cents, soybean oil climbing higher with meal, beans, crude and canola futures
Canola is up 10-15 cents, ideas that futures were oversold has prices climbing higher
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February 11th and 14th - Introduction to Options Trade, Minot Office, 12:30 lunch, 1:00 Meeting
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February 26th - Introduction to Futures, Hedging and Basis, Lignite, 8:00 AM
*If you don't see a location near you do not fear - there are more to come!
Grain futures are staging a pretty good rally this morning with soybeans and spring wheat leading the way higher. Volume is fairly light which really helps to push futures higher with the present buying interest. It seems that grains are focused on weekly export sales as those were better than expected for corn and wheat. Outside markets are favorable with the US dollar lower and crude prices up about $1.15/barrel.
In addition to strong export sales, wheat futures are focused on potential losses/damage to the winter wheat crops that occurred in January. However, winter wheat futures are not seeing the gains that spring wheat futures are. In fact, Chicago futures have worked their way lower and Kansas City hard red winter wheat futures are up only a penny or so. Also, recent snow cover has worked to provide insulation and moisture to the crop which may help ease some concerns that we saw earlier this week regarding crop condition deterioration. Wheat weekly export sales were above estimates that ranged from 450-700 thousand metric MT(TMT), coming in at 733.6 TMT. With the decline in winter wheat futures we are now seeing spring wheat gains backing off from their highs. It wouldn't surprise me if we saw a weaker tone into today's close.
Canola futures are working their way higher this morning after a fairly quiet finish yesterday. Despite a large Canadian crop, futures are rising on concerns that perhaps they were a bit oversold. If you recall, canola prices were fairly high for the fall and much of the early winter and heavily sold off mid-December through January. Now it seems the market is saying it was a bit too much and prices are working their way a little higher. Some sources say that canola futures are stuck in a rut and will be at current ranges for at least a couple more months. Canadian acres are expected to increase in 2014-15 with one estimate being 21.62 million acres compared to 19.94 million acres planted in Canada last spring. StatsCan will not release its canola acreage estimates until late April. If acreage estimates are accurate it will be tough for canola to maintain price strength given the potential decline in soybean prices and a large 2013 crop that needs to move. However, demand for canola is strong as there are several new crush facilities that have been built in the past few years, keeping oil demand strong.
There is not much to talk about regarding the higher soybean prices this morning. Old crop futures are gaining relative to new crop, widening the inverse between old crop and new crop (meaning old crop prices are higher than new crop prices). The market is expecting to see the USDA decrease its US carryout, which is already fairly tight at 150 million bushels. This will result in the need to ration available US soybean supplies which happens by raising prices. New crop soybean prices are up only three cents at the moment and November futures are over two dollars lower than March. This means that the market is expecting that there will be ample supply available by November, which makes sense given that the US has harvest by then. The potential for large US acres will keep a limit on new crop price gains as we move forward. It will be interesting to see what happens to soybean prices this spring/early summer. Export sales for the week were in line with estimates (650-1050 TMT) at 796.50 TMT.
Demand for US corn remains strong and that was displayed by weekly export sales of 1700.10 TMT...well above estimates that ranged from 900-1350 TMT. Export demand is remaining well ahead of current USDA projections and it's likely that the USDA could increase its export estimate in Monday's report. However, while demand is strong on the export front, movement is heavy in the corn belt as many growers are selling their supplies. Strong movement to ethanol plants has basis bids backing down in many areas and is probably also limiting futures gains as well.
Kayla Burkhart
Broker/Procurement
SunPrairie Grain
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1800 13th 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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