SunPrairie Grain Morning Comment

MINOT - Mar 5/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Opening Calls:

Wheat: Might gain a couple pennies following a lower dollar

Soybeans: 2-3 higher with gains limited by continued South American

harvest of a huge crop

Corn: 2-3 higher following the outside markets

Seems like we're going to continue the yoyo grain markets that we've

been experiencing the past few weeks. These markets are just crying out

for some fresh fundamental news - so much that speculation about spring

flooding and the planting report at the end of the month are highly

talked about subjects. Trading will likely remain choppy and follow the

dollar until at least Wednesday. On Wednesday the USDA releases their

monthly supply and demand report. Sometimes the market listens to these

reports and sometimes the market ignores them - but since there's such

little fundamental news I have a feeling that the market will probably

take a look at what the USDA has to say. As I mentioned yesterday corn

could see a slight reduction in 2009 crop production due to corn not

getting harvested in some areas. Soybeans aren't likely to see a change

in US production numbers but South American production numbers are fair

game. If we see an increase in SA production numbers it could cause the

bean market to lose some ground. I haven't heard a lot of predictions

for wheat - some think that the ending stocks number is too big - but

even if it gets reduced it probably won't be significant enough to make

wheat a bullish market. There's still a lot of wheat out there. I've

said this before and I'll probably say it again - but what do you guys

think is going to happen to wheat prices when on farm bins start opening

up and making room for this year's crop?? Increased producer selling

doesn't have a tendency to make a market go higher and wheat is no

exception.

Winterkill isn't a threat to the winter wheat crop for the next two

weeks in the central and southern plains. Yesterday's closes were the

lowest the market's seen in two weeks. Exports will probably continue to

drop unless US prices come down. I know you guys don't like these price

levels but nobody outside the US wants to buy our wheat at them - they

can get it cheaper elsewhere.

Canola followed soybeans and soyoil lower yesterday - and that combined

with a higher Canadian dollar didn't help things out either. Canola has

also come under pressure from hedging and the continued soybean harvest

in Brazil. Increased planting in both Canada and the US will also weigh

on the market.

Attached is a graph showing the relationship between 2010 nusun prices

at Enderlin (thanks Guy) and their local elevator cash soybean prices.

First off - it helps you see the relationship between sunflowers and

soybeans. Sunflower oil needs to stay competitive with soybean oil - so

if the price of soybean oil decreases then it's going to limit upside

potential of sunflower oil....and sunflowers in Minot, ND. What causes

the price of soybean oil to decrease? Well - a large crop in South

America where beans are already cheaper than US beans might do the

trick. That's why our oil markets (Canola, flax, flowers etc) are

keeping a watchful eye on how big the crop in South America is. What's

also good to look at here is that we keep hearing that the price of

sunflowers (and every other commodity) just HAS to go up. Well -

sunflowers have gone up and this graph shows that. I'm not saying that

they won't go up higher because I don't know for certain what they'll do

-but what I am saying is that maybe you should take a look at current

level prices because they're really not all bad...

If anybody is having problems seeing the graphs let me know - I'd be

happy to try and send them using a different method.

Anyway I'm sure you've had enough of me for the week so have a fun and

safe weekend!

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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