SunPrairie Grain Morning Comment
MINOT - Jul 28/14 - 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 07.28.2014:
Wheat is 3-6 lower, bigger winter wheat yields as harvest moves north, ideas that US production estimates should increase (Mpls Sept last trade 6.21 ½, KC Sept 6.25 ¾)
Soybeans are 9-12 higher, Chinese buying interest boosts prices again, thoughts that large US production has been factored into prices for now (Nov last trade 10.94)
Corn is 0-2 higher, demand working its way back into the market as prices have become low enough for buyers to step back up to the plate (Sept last trade 3.65 ¼)
Sunflowers are unchanged, bean oil movement is fairly quiet as oils struggle this morning, rising soybean prices provide some support
Canola is unchanged, futures really quiet, drop in crude oil futures may be limiting gains that come from a rising soybean complex
Wheat futures are lower this morning but the row crops are higher. It seems that corn and soybean futures have, for now, factored in big crop estimates and are focusing on some demand news that's around this morning. Fundamentally there is not any major fresh news that is driving prices higher, oversold futures conditions are simply helping to push prices higher. A lack of weather concern will likely limit gains. Continuing global tensions will work to provide underlying support to the crude futures market but this morning is doing little as prices are down about 83 cents/barrel. The US dollar is just slightly lower at the moment.
The market is beginning to think that we could see an increase in US wheat production estimates, especially after last week's spring wheat tour reported huge yield potential. Globally wheat supply is quite abundant and a larger US crop would only further weigh on prices. Sure, there are some spots that are seeing less than ideal growing conditions, but other areas will make up for what's lost in those spots. For example, Australia is reporting dryness in areas while Russian crop production estimates seem to get bigger by the day. One estimate is pegging the Russian crop at over 4 million metric MThigher than current USDA estimates. US hard red winter wheat yields are improving as harvest moves north, which isn't really a surprise as the southern areas were hit with drought this year.
Reports of Chinese buying up soybeans has worked to push soybean futures to double digit gains this morning. I've been hearing of droughts to some of China's soybean growing areas which might be part of the reason for the recent demand. Adding strength to the soybean market is concern about US growing conditions being too cool and dry as the crop will need some heat units to push it along. Regardless, though, the US will still have a pretty big soybean crop. Soybean meal and soybean oil are also higher this morning. Soybean oil is not a whole lot higher, though, and canola futures gains are not anything to get excited over either. So it looks like it will be a pretty quiet day in the oilseed markets.
There is little fresh news to report for corn futures this morning. It looks like buyers could be returning to the corn market, indicating that prices have finally gotten low enough to get them interested in scooping some up. The corn market is in a game of tug of war...it's increasing demand on one side and large production on the other, today increasing demand is winning the war and pulling prices higher. We'll need to keep an eye on Brazil as harvest is nearly half done and supply is available.
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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