SunPrairie Grain Morning Comment
MINOT - Apr 28/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:45 AM CDT:
Wheat is mixed, -1 to +3, strength is faltering, Ukrainian events keep market elevated (Mpls July last trade 7.49 ¾, KC July 7.81)
Soybeans are 3-10 higher, old crop up with tight supplies, new crop follows as usual (July last trade 15.03 ¾)
Corn is up 1-3 cents, planting weather stinks, markets increase as poor weather is forecast for the week (July last trade 5.151/4)
Sunflowers are unchanged, bean oil slightly higher but not finding strength that soybean market is
Canola is 5-10 cents higher, following positive direction of soybean complex, buying enthusiasm light after last week's gains
Rainy weather all over has grain futures rising on thoughts of delayed planting progress. Political events in Ukraine have markets finding some strength as well this morning. The US dollar is a bit lower this morning and crude prices are up about 40 cents/barrel. Wheat prices are all over the board this morning while corn and soybean prices are sticking mostly higher, though off their overnight highs.
Rains seem to be falling everywhere over the US...except for over the hard red winter wheat belt which is the area that probably needs it most. The hard red winter wheat quality tour starts today and I will let you know what I hear coming from it. Spring wheat areas woke up to snow this morning which really was not needed at all. There have not yet been any interruptions to Ukrainian and Russian exports as a result of the unrest that has been occurring there. It could be hard for the market to find additional strength on this news. However, the market is now starting to focus on how Ukraine will be able to finance this year's crop but since planting is well underway it seems pointless to worry too much. The International Grains Council (IGC) reduced its production estimate and carryout for 2014-15, but global supplies remain ample enough for demand. Unfavorable weather in the US is being countered by favorable weather in Europe.
Soybeans are again focusing on positive news instead of negative for finding price direction this morning. Old crop supplies are tight and weather is not that great - so soybeans are finding some strength this morning. Concerns about Chinese defaults are easing as some are saying it's a "short term" incident. Additionally, China is expected to delay auctioning off additional state reserves. The auction was expected to happen sometime this week, initially. The market is also not focusing on the fact that the US is importing soybeans and soybean meal to help handle tight supply constraints. Canola prices are again higher this morning which is quite the feat considering the gains the market saw Friday. It will continue to look to the soybean complex for direction. Soybean planting progress is expected to be reported at 1-3% complete, in line with the average progress at this time of year at 3% complete.
Corn planting weather stinks and forecasts don't look much better. Cool, wet weather is expected for much of the corn belt over this next week and progress could be limited. The market is again talking about the potential for corn acres to switch to soybeans. However, the USDA is expected to report pretty hefty planting progress made over this last week. The market is estimating that the USDA will peg progress at 20-25% done, which is quite the jump from only 6% last week and not too far below the average pace of 28% done. If estimates come in below what the market is expecting you can bet that corn prices will find reason to trade higher off the news. Export demand for old crop US corn also keeps prices stronger. The IGC reduced its global production estimate for 2014-15.
From a supply and demand perspective there is little reason for grain prices to trade substantially higher. However, with unpredictable factors like the weather and political unrest between two major exporters it is really tough to say what prices will do.
Kayla Burkhart
Broker/Procurement
SunPrairie
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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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