SunPrairie Grain Morning Comment

MINOT - Mar 2/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Opening Calls:

Wheat - lower again today - where's the demand???

Corn - steady to higher - maybe yesterday's losses were overdone

Soybeans - steady/lower

It was another quiet overnight session in the grain markets. The outside

influences aren't providing much direction as the dollar has traded both

sides (currently a tiny bit lower) and crude is marginally higher.

Yesterday's losses in corn have the market wondering if its lost its

upward momentum. Corn was unchanged in the overnight trading session but

the trade may think that the market went too far to the downside

yesterday so we may get some of that back today. Forecasts for warmer

weather and precipitation in corn growing areas could further fuel

concerns about flooding. The 30-60 day forecasts are a little more wet

than normal as well - like I said we're in that time of year where the

market likes to guess about what fundamental factors might do. Either

way these weather concerns may provide some underlying support.

Beans don't have a whole lot of news...Brazilian harvest will really

pick up steam this month and the market is learning that the flooding in

Argentina was localized - not widespread. Strong exports helped beans

hold their own yesterday - which is why they didn't experience the

losses that the corn and wheat markets did.

Well any good news that helped influence Friday's rally in the wheat

market was sucked right out yesterday when we lost everything Friday

gave us. Funds continue to influence the swings in the wheat market and

it looks like they're following the value of the dollar. The dollar was

higher yesterday so wheat lost 13 cents. Australia estimated that their

output will increase a little over 1% to 21.94 million tones and exports

will raise 4% to 14.43 million tones. The fact that Australia plans to

increase exports into the already flooded world market probably won't

help wheat prices too much - - but these are just estimates so who knows

if the market will listen. Yesterday's change in attitude was

contributed to the dollar and the result of an Iraqi tender. Iraq

decided to buy wheat from Russia and Canada instead of the US - which

helped to further yesterday's price depression. As of now there are

still no concerns about the winter wheat crop. Looks to be plenty

moisture in spring wheat areas but the primary concern is whether or not

the crop will get planted on time.

Canola finished on the defensive yesterday despite a rise in the

Canadian dollar and the large amount of global oilseed supplies. The

Chicago Board of Trade futures pulled canola lower but as the oil and

soybean markets turned around the Canola market tried following - but

had a tough time due to lack of buying momentum. Light commercial demand

is supporting the market as Canada is exporting to China.

Sunflowers are following the outside markets as well and keeping a close

eye on the South American soybean crop. Major sunflower areas in

southern India are experiencing hot and dry weather. While moisture is

still pretty good for the growing season if this weather continues it

could put some stress on their sunflower crop. Attached is a graph of

vegoil prices (soy, rapeseed, palm and sunflower). The reason I attached

it is because we hear every now and again that "prices have to go up".

Well, if you take a look at this graph you can see that sunflower oil is

already relatively higher than its competition. If sunflower oil wants

to stay competitive I'm not sure how much further it can go - and with a

large South American soybean crop looming over our heads that makes me

think that gains in the sunflower market could be limited so we don't

price ourselves out of the market.

You can reach me at Kayla.Hoffman

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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