SunPrairie Grain Morning Comment
MINOT - Feb 18/14 - 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 2-4 cents, Minneapolis leads way higher, strong domestic demand supports prices (Mpls May last trade 6.51, KC May 6.67 ¾)
Soybeans are 14-18 cents higher, soybean meal prices rally again, pulling rest of the soybean market with it (May last trade 13.43)
Corn is 0-2 higher, reluctantly following wheat and soybean markets higher, strong export demand (May last trade 4.51 ¼)
Sunflowers are up 10-20 cents, soybean oil rallies with soybeans and soybean meal
Canola is 30-40 cents higher, market finds strong buying interest as soybean complex and crude prices are sharply higher
The soybean complex is coming in hot after a long weekend. Soybean meal prices seem to be leading the way higher...providing good support to the oilseed markets in general. Higher crude prices and a lower US dollar are also supportive for prices. Spring wheat seems to be the leader of the wheat futures this morning and corn futures are chopping their way higher.
Domestic wheat demand is the big reason for higher wheat prices over these past few weeks, especially when you consider that rail freight logistics are a complete mess. The fact remains that there is a lot of wheat to move, not only in the US but in Canada as well, however that wheat cannot get on railcars right now which creates a premium for nearby prices. The result is stronger futures prices and increasing nearby basis levels. Producer selling of spring wheat has been very strong lately so prices will no doubt relax when wheat begins to move. Consider nearby prices a good opportunity to lock something in.
Tight US soybean ending stocks means tight soybean meal stocks and prices are increasing substantially, pulling soybean and soybean oil futures along for the ride. There are thoughts that US soybean meal futures are becoming overbought, but that is having little impact on prices today. However, it could mean that we are susceptible to downward price action/selling pressure if a correction takes place. Also, funds are net long soybean futures (and seemingly adding to that position) so when they decide to start liquidating those positions (selling) we will likely see some downward movement then as well. The market is well aware that there will be an increase in acreage estimates from baseline USDA estimates released last week and that will be in the back of traders' minds. Brazil is reportedly over 20% harvested.
Corn futures have justifiable reason to trade higher when you consider the demand news in the marketplace. Lots of buyers have come back to the US for corn needs now that prices have relaxed. However, the US produced a huge crop that still needs to be marketed and the recent bump in prices has resulted in a pickup in producer selling. The market also expects that grain movement will pickup with improving weather.
Canola prices are sharply higher this morning. Support is likely coming from an increase in crude futures as well as the soybean complex. Buying interest after strong selling pressure last week could also be lending a helping hand. Logistical problems in Canada preventing the crop from moving could also be part of the reason for higher prices. Birdfood sunflower prices have also been well supported recently as it seems buyers are again taking an interest in getting some product. That's how the birdfood market seems to work - all the buyers are in at one time and they're all out at the same time as well. Right now they're working their way back in and we may see a nice little bump to prices, at least until that demand is met.
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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