SunPrairie Grain Morning Comment

MINOT - Mar 9/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Opening Calls:

Wheat: 3-5 lower following a higher US dollar and large global supplies

Soybeans: 5-6 lower - further pressure from continued harvest in South America

Corn: 3-4 lower following quiet overnight trade

Looks like everything is lower except for the US dollar right now - grains, crude, bean oil and just about everything else have a negative sign in front of them today. Same old story though - dollar wants to trade higher today so our commodities are likely to get pushed lower. Also - it seems that there has been some speculative position evening in front of tomorrow's USDA report. What that means is that people are buying/selling contracts based on what they expect the report to say tomorrow to get their positions in a spot that they're comfortable with. For example - if speculators believe there is going to be really bad news for the wheat market that causes it to crash tomorrow then they'll sell wheat contracts today to get a higher price instead of losing money if the market should crash in the wake of bad news. To clarify I'm not saying this is or isn't going to happen tomorrow - just trying to explain market terms for those who aren't familiar with them. Trading has been pretty light as the market is just dying for news and all eyes have been on this month's USDA report. If this report doesn't have anything exciting to say then all eyes will go the prospective plantings report that is to be released at the end of the month.

Let's see...Japan's recent buying interest of US corn is being credited to the higher freight rates in South America making their corn more expensive. Tomorrow's report is excepted to reduce 2009 US production and maybe reduce demand - so it could be a wash. The only surprise could be how much 2009 production is reduced - the average market estimate is around 70 million bushels. This reduction is due in part to farmers in the Dakotas plowing over corn that's still in the field instead of harvesting it in order to get the 2010 crop planted on time. Argentina crop numbers are also expected to increase - so we'll keep an eye on those too. The corn belt is forecasted for warmer temperatures which could spur fears of flooding...however there's also a forecast for drier weather so the lack of precipitation will limit flooding fears. Farmer selling is slow as many producers are holding onto their wheat into the prospective plantings report release on the 31st.

Soybeans are the same old story. South American harvest of a big crop is weighing on the market. Tomorrow's report is expected to recude the carryout from 210 mill bushels to 195 million bushels. South American production numbers will also be something to keep its eye on - especially because two Brazilian companies have officially announced that soybean production in brazil is almost a million metric tons higher than it was last month. So a USDA upward revision of around 1 million metric tons is expected. China also lowered its import estimates for March which doesn't help the market out either.

Wheat will likely be pushed lower today due to weaker outsides and falling corn and bean markets. Tomorrow's report probably won't have much friendly news for the wheat market - we might see a 10 million reduction in the carryout taking it from 981 mill bu to 971. Reduction is good, right? Well there's still a TON of wheat out there and a meager 10 million bushel reduction when there's almost a billion in carryout likely won't do much in the way of supporting the wheat market. The market needs to turn its attention to the winter wheat crops and spring wheat planting - talking about the carryout is unnecessary at this point because we already know there's plenty of wheat out there. The carryout will continue to anchor prices lower.

The canola market had the lightest trade in 6 ½ months yesterday and just decided to follow beans higher. Canola doesn't have a clear market direction at this point either as crushers are well supplied, farmers are not selling and there's not a lot of export news. So my guess is that canola will follow soybeans and soyoil lower this AM unless it finds some unexpected demand that supports the market.

Sorry to talk about that report so much today - but like I said this market is just dying for news so it's really all that's out there right now. Sometimes the market really looks to these reports for direction and sometimes it barely even notices that they're released...it all depends on the climate we're in.

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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