SunPrairie Grain Morning Comment
MINOT - Jul 22/14 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.
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Market Outlook as of 8:55 AM CDT 07.22.2014:
Wheat is up 2-4 cents, ideas futures are oversold, prices up with corn (Mpls Sept last trade 6.29, KC Sept 6.33 ¼)
Soybeans are 7-11 higher, old crop up on sales of supply, new crop following (Nov last trade 10.79)
Corn is 1-3 higher, lack of fresh news, lower prices spur hopes for improving demand (Sept last trade 3.66 ¼)
Sunflowers are unchanged, soybean oil is only slightly higher despite increase in soybean futures
Canola is unchanged, futures are trying to recover after yesterday's sharply lower session but prices are having trouble finding strength
The US dollar is higher this morning as the market anticipates that the Fed will have to increase interest rates. An increase in interest rates signals economic strength because if the Fed increases rates that indicates that we can afford to pay the increased rates, giving the dollar reason to trade higher. A higher US dollar is generally not favorable for commodity prices but the grain futures markets seem to be paying little attention at the moment. Crude prices, though, are a bit lower this morning, down about 25 cents/barrel at the moment. There is still no weather threat to speak of for the corn and soybean crops and condition ratings remain high. There are indications that August could see less precipitation than average but right now that feels like the market is grasping at straws if it's trading off of that speculation. The spring wheat crop tour begins today and I will keep you updated on what I read.
Indications that wheat futures are oversold for the moment have prices bouncing back right now. Additionally, mild strength in the corn market provides some support to wheat futures. However, if the long term trend for corn futures is lower we will most likely see wheat follow suit. There is some demand news around for US wheat in the global marketplace which is encouraging. Global supplies, though, remain abundant and weather is improving. The USDA reported US winter wheat harvest at 75% complete, which is on pace. Spring wheat crop conditions remain quite high at 70% good to excellent. ND spring wheat continues to see phenomenal ratings at 82% good to excellent. The US barley crop is 66% g/e and ND barley is 80% g/e.
Improving crop conditions should be weighing on soybean futures but the markets seem to be ignoring the news. Ratings increased by 1% to 73% good to excellent this week. ND soybeans are rated 78% good to excellent. Today's higher prices seem to be from technical buying more than any fundamental reason. However, reports of an old crop soybean sale to China (further tightening US old crop supplies) seems to be helping out old crop futures pretty substantially this morning. Argentina has resolved its port strike issues for now with no reports of major shipment delays.
A lack of fresh news coupled with lower prices stirring hopes for demand have corn futures mildly higher at the moment. The market seems to be pricing in yield expectations of 170+ as crop conditions remain quite high. The USDA pegged the US crop at 76% good to excellent with the ND crop rated 79% g/e. Corn has strictly been trading a weather market and with no weather threats to be concerned about prices are trending lower.
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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