SunPrairie Grain Morning Comment

MINOT - Mar 11/10 - SNS -- Following is the morning comment from SunPrairie Grain, a division of CHS.

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Opening Calls:

Wheat: 2-5 lower as large supplies continue to weigh on the market

Soybeans: 4-6 lower following concerns about China cancelling shipments

Corn: 2-4 lower due to a lack of supportive outsides and follow through

from last night's trade

As of right now crude is down about 50 cents and the dollar is trading

higher -we know this type of environment for outside markets isn't

favorable for our grain markets. Now that the USDA Supply and Demand

report is "old news" the market's eyes will start focusing in on the

March 31st release of the USDA Prospective Plantings report. This is the

first official estimate of what will be planted this spring based off of

producer survey results. The report gives us an indication of how much

of each commodity planted in the spring we might produce this year. If

the market feels there's too much of one commodity or not enough of

another it can impact prices either negatively or positively.

The USDA could increase corn plantings this spring by as much as four

million acres over last year's total of 86.5 million. Farmers continue

to be slow sellers at these levels and end users don't have a whole lot

of buying pressure on them due to high ending stocks - seems like it's

somewhat of a waiting game. The end users know the corn is out there and

are covered for their immediate needs - they also know that as

temperatures increase that producers will be forced to open up their on

farm grain bins and move corn to prevent quality concerns. So there's no

immediate need for them to bump up prices at the moment. However - if

producer selling doesn't pick up before end users feel a little bit of

supply crunch we could see an increase in cash prices to help coax some

of that corn out the bin. Who knows. Planting delay concerns will

continue to support the market. Exports came in this week lower than

expectations of 600-850TMT at 338.6 thousand metric tons. Oh and one

last thing about yesterday's report - USDA didn't resurvey production in

the Dakotas so changes in corn production for our area will be released

at a later date.

Exports were negative at -115.8 TMT this week (expectations were

+200-300TMT) which indicates that there were some cancellations of

shipments this week - maybe China? Yesterday I was hearing about fresh

sales to China and today I'm hearing rumors of cancellations - that's

how fast things change around here everybody and the reason why what

these markets want to do is anybody's guess. There are concerns that

China is taking actions to slow their economy once again - to reign in

lending the government might be increasing the country's inflation rate.

This is a concern because China is our biggest bean buyer and if they're

out of the market (especially at a time when South America is harvesting

a huge crop) it won't bode well for the bean market. Or our oil markets

for that matter. Remember that canola oil, sunflower oil, beanoil etc

etc all have to stay competitive with each other - if there are factors

pushing one down that's going to limit how high the others can go. Let's

see...the market is a little nervous about acreage due to a tighter

carryout and USDA's increase in export numbers (this week's export

numbers don't support that increase) so maybe an increase in bean acres

won't be so bad if we can keep our demand. Brazil harvest is

accelerating and the early birds in Argentina are getting rolling as

well.

Exports were in line with expectations (250-450TMT) this week at

407.9TMT - this is a good sign because it's nearly 300TMT above last

week's pitiful sales. However - Egypt again passed up US wheat for

Russian and French wheat indicating that US wheat is still relatively

overpriced in the world market. If exports don't pick up we could see

our carryout continue to grow - we definitely don't need this to happen.

Support may come from concerns about the HRW crop and the fact that

prices may deter farmers from planting spring wheat. However we have a

billion bushels of wheat going into this year. It's a pretty nice

cushion to sit on - so it would take something really drastic to make

prices spike up too much. Yes I'm sure we'll see a rally here and there

but I don't think prices are going anywhere crazy. They just can't. How

can prices go higher when we already have half of next year's usage

covered with this year's crop?? If you guys are still holding onto some

wheat and you can make these prices work then I'd look to bring some of

it in. And if you can take advantage of a day where the market's rallied

then that's even better. As I see it right now there is just no reason

for wheat prices to trade a whole lot higher than their current

levels... I'm sure we'll continue to see price spikes due to a lower

dollar and speculative profit taking - these factors may provide

underlying support but the billion bushels on hand will also be

providing market resistance.

Canola followed soyoil higher yesterday and was also supported by the

buying back of previously sold conditions. Export pricing, continued

processor demand and fresh export demand also provided strength. The

upside was limited by the Canadian dollar. The long term canola outlook

is worried about the continued talk of acres moving to canola from other

commodities this spring. If that's the case upside potential in the

canola market will be limited.

It's been warming up here in the Minot area lately....below is a sign

that summer is just around the corner.

Summer's almost here ...we can now see the deer moving around in

our back yard.

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Yep, won't be long.

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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