SunPrairie Grain Morning Comment
MINOT - Jul 14/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:50 AM CDT July 14, 2014:
Wheat is 0-2 higher, recovering slightly from last week's losses, global wheat supplies and lots of competition weigh on prices (Mpls Sept last trade 6.28, KC Sept 6.37 ½)
Soybeans are up 8-12 cents, old crop higher and pulls new crop along for the ride, about time for recovery considering recent losses, profit taking likely the cause (August last trade 12.09)
Corn is 1-3 cents lower, favorable weather, pollination conditions great (Sept last trade 3.75 ¾)
Sunflowers are unchanged, soybean oil is mixed this morning as crude prices are lower but soybeans are higher, leaving bean oil without direction
Canola is up 5-10 cents, futures slightly higher but gains limited by losses in soybean oil and crude oil futures
*Ultimate Plot Tour*
Please join us for the Dakota Agronomy Partners Ultimate Plot Tour tomorrow afternoon, one mile west of the Renville corner on the north side of Highway 5. The tour starts at 2:30 and will cover sunflowers, corn, soybeans, wheat and canola as well as grain markets. We hope to see you there!
With the USDA's crop production and monthly S&D reports out of the way the grain markets are turning their focus to weather, which is lacking any major threats to the crop. Corn futures are a little lower, soybeans are higher with some technical buying interest and wheat futures are reluctantly higher. Steady crop condition ratings are expected in this afternoon's weekly USDA report. Some think that the large crops expected this year are factored into prices and that we are due for a bounce, however the market does not seem to be willing to go much higher. There are hopes that lower prices could help spur some demand but there has been little, if any, news to report. Crude futures are falling this morning as concerns about supply from the Middle East fade. The US dollar is slightly higher.
The USDA increased its wheat ending stocks estimate for the 2014-15 crop to well above what the market was expecting. The increase in stocks came in part from an unexpected decline in usage. The USDA pegged US ending stocks for 2014-15 wheat at 660 million bushels, the average market estimate was 591 million bushels. When combined with good production out of the Black Sea Region and Europe, things do not look too good for wheat. Ukrainian harvest is reporting better yields than last year so far. Global stocks for 2014-15 were also increased and reported at a higher than expected number.US all wheat production was increased, reflecting an increase in other spring wheat production estimates.
Also from the USDA on Friday was an increased estimate in soybean production, which was also higher than what the market expected to see. US production was estimated at 3.8 billion bushels, up from the June estimate of 3.635 billbu and last year's production of 3.289 billbu. US 2014-15 soybean ending stocks estimate increased to 415 millbu, up from the June estimate of 325 millbu. Additionally the USDA did a surprise increase of 2013-14 US soybean ending stocks to 140 millbu (from 125 millbu), when the market was expecting to see an estimate of 128 millbu. So that is why soybeans fell off on Friday. Global soybean ending stocks also increased in Friday's report. Today, though, it looks like soybeans are due for a bit of a recovery as investors are buying back some of the contracts that they have sold off.
There was a pretty good drop off in corn prices last week but funds were still net buyers of corn contracts when all was said and done. There is chatter being reported in China that new GMO corn varieties may not get approved for import any time soon - that is not good news for those who are having anything to do with Syngenta's MIR-162 GMO trait. Overall corn weather is still very favorable for crop development and futures will have a hard time justifying higher prices. The USDA estimated corn yield at 165.3 bpa and production at 13.86 billion bushels, which is slightly lower than what the market predicted but still very strong production. Ending stocks for 2013-14 increased as did estimates for the 2014-15 US ending stocks. Global ending stocks increased substantially as well, citing increases in Brazilian production numbers.
Overall the tone for the markets still seems lower. We could see a bit of a corrective bounce but without any major weather concerns futures will want to continue to drift lower as expectations for a large crop are really pushing things down further. The silver lining on things is that lower prices could attract demand.
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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