SunPrairie Grain Morning Comment

MINOT - Mar 8/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

Opening Calls:

Wheat: steady/few cents higher following a lower dollar

Soybeans: 4-6 higher, following crude

Corn: steady/higher, good demand

Well as of this morning the dollar is trading a little bit lower and crude is about 60 cents higher. Our grain markets will probably follow the outsides and right now they're telling us we might be a bit higher. However - things felt this way on Friday too and look what happened then (wheat fell 7 cents). So who knows we could be unchanged/up a few cents and have an uneventful day today or we could squeeze a few pennies out of this market to the upside and watch everything turn around and fall off like they did on Friday. At a time where there's not a lot of news, how these markets want to trade are really anybody's guess - if I knew exactly what was going to happen I guarantee you I wouldn't be sitting behind a desk in snowy North Dakota....a private island in the Caribbean sounds quite nice!

Enough of the day dreaming...Japan bought some US corn over the past few days which will help provide some support for the market because it shows that there's still some demand for our corn despite quality concerns. My guess is that Japan upped the quality specs of corn they're buying - for example instead of buying number 3 or better corn they're buying ##035;2 or better - to ensure the quality they desire. Also, South American freight rates have increased - meaning that their commodities are now more expensive. In fact - US corn is, at the moment, cheaper than corn from Argentina. That may also support the corn market. The main portion of the corn belt is forecast to have ¾-2" of rain this week and muddy roads from rains in Argentina are slowing transportation of the harvested corn crop. One big thing that will continue to weigh on the corn market is anticipated producer movement of the 2009 crop in front of spring planting - before temps raise and damage the quality of the corn in the bins.

Beans are being further pressured by South American bean harvest but wet conditions may delay the speed at which the crop is harvested. Increased freight rates in SA may ignite hopes of continued US bean demand. The Chairman of COFCO (China's largest grain trader) said that he doesn't expect soybean prices to fall much lower (note: I didn't see where he said he expects them to go higher...). Maybe what he's saying is that we've found our support levels and that beans are cheap enough and don't need to get cheaper. Who knows. China also anticipates that their bean acres will be down again this year. Oh and for those of you that are interested - Brazil is at about 33% harvested compared to 27% last week.

Attached is a graph that shows the Minneapolis May 2010 wheat contract (black line) against the dollar (blue line). I keep talking about how the dollar pushes our commodities up and down - this graph shows that. I attached a similar graph when I first started this email a few weeks ago - but that was over a much longer time period whereas this is starting in mid October. It's a just a visual for you to take a look at to help you understand how the dollar really can have an impact on local wheat prices.

There isn't much new news in the wheat market. India is reporting that its stock are more than double their target (their target was around 8 million metric tons and their stocks are around 18mmt). Consequently...India is planning to export some wheat to free up storage space for their upcoming harvest. Other than that our huge ending stocks continue to be a burden on the market and will seriously limit any upside potential.

That's it for now!

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

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by or from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its staff or its management.

PageGen v1.0ef