Market Update from Country Hedging
(7/3/2008)

The USDA’s June grain stocks and U.S. planted acreage report was mostly bearish for corn and wheat, and neutral for the soybean complex. Let’s take the planted acres first. The USDA did a special phone survey the last week in June of producers in the wettest areas of Iowa, Illinois and Missouri. They came to some interesting conclusions, based upon that survey. First of all, planted corn acres were estimated at 87.3 million acres versus 86.01 in the March estimate. This matches what we were hearing this spring that farmers were planting more corn because those futures had gained on soybean futures in April. This increase in planted acres, however, was being offset by the wet weather. The USDA lowered harvested acres accordingly, and only increased harvested acreage by 100,000. The spring wheat planted acreage was 14.197 million acres, down slightly from the March estimate, but in line with pre-report trade guesses.

The USDA estimated U.S. soybean planted acres at 74.533 million acres, down about 260,000 acres from the March estimate and just a little under the average trade guess. As with corn, the USDA made a significant change in harvested acres, predicting only 96.8 percent of the U.S. soybean crop would be harvested versus an average of 98.7 percent. We figure the soybean acreage number will go up. Currently, soybean futures are trading well over $16 a bushel and this is a significant impetus for the U.S. farmer to plant as many soybean acres as seed supplies allow. That’s what we’d do.

On June 1, the USDA came out with a fairly neutral soybean stocks estimate of 669 million bushels, compared to last year’s 1.092 billion bushels at the same time. This was expected by the trade and indicates a very tight U.S. soybean carry-out this crop year. Corn and wheat stocks were both above expectations. The USDA pegged June 1 U.S. corn stocks at 4.028 billion bushels, about 100 million bushels above the average trade guess. Total U.S. wheat stocks were 306 million bushels versus the average pre-report estimate of 264 million bushels. Both corn and wheat stocks seem to indicate some rationing due to the high price of the commodities. Better get used to this, because it looks like it might last awhile.

December corn futures, after trading limit down on Monday and almost limit up yesterday, ended the week down 10 cents. November soybean futures were up 71 ½ cents for the week. The nearby July soymeal contract futures put in a new all-time high today of $454.50 a ton, eclipsing the old high from June 1973. Minneapolis September wheat futures were down 62 ¼ cents, Kansas City September wheat futures were down 32 ¾ cents, and Chicago September wheat futures were down 34 ½ cents, all for the week.

For daily commentaries on specific commodities in grains, energy and livestock, visit www.countryhedging.com.

This information is taken from sources which Country Hedging believes to be reliable, but is not guaranteed by it as to accuracy or completeness and is published here for information purposes only. There is a risk of loss when trading commodity futures and options. Country Hedging Inc. bases its recommendations solely on the judgment of Country Hedging Inc. personnel.

CHS Contributes to Midwest Flood Relief
(7/3/2008)

With an ongoing commitment to the vitality of the communities where CHS does business, the CHS Foundation will make a $20,000 contribution to the American Red Cross in response to the floods that have destroyed homes and communities across much of the Midwest. In addition, CHS Energy is distributing $6,000 in pre-paid Cenex® gift cards to the Red Cross and United Way for disaster recovery in the Cedar Rapids, Iowa area.

Expect a jump in fall potash prices
(7/3/2008)

Potash Corporation of Saskatchewan (PCS) is expected to release its new fall pricing in the next week or two, and the industry prediction is that prices will be significantly higher than those for June through August. “I wouldn’t be surprised to see the new pricing start with an eight,” says Burnie Baker, CHS supply manager for potash and phosphates.

He says all the fundamentals are there for continued price increases. “We know that at least from now through December, allocations will remain tight,” he says.

One Canadian producer has already indicated supply for fiscal year 2009 will not be larger than the past fiscal year. “Another producer has new production scheduled to come online in December ’08, but the impact of that increased supply will not be felt until late into the spring of ’09,” he says.

Producer inventories are currently at low levels and expected to remain that way going into fall. “If the weather permits, we would anticipate that dealers will drain their inventories during the fall application period in the cornbelt states, with corn acreage projected to be higher next year,” says Baker. “That will set up the need for strong movement during the winter fill period and a strong market throughout spring of 2009.”

The industry is actively seeking new sources of potash, he says, noting that three companies last week announced plans to begin exploration in Nova Scotia and Newfoundland, Canada, and in Utah, Colorado and New Mexico. “With the strong demand and current limited supply, there are more companies looking to get into the potash business.”

Upper Mississippi River still closed at St. Louis
(7/2/2008)

Water levels on the Mississippi River at St. Louis crested early this week, at just under 9 feet above flood stage, according to the National Weather Service. The river began to fall in the city on Tuesday, but it has been a slow drop, notes Chris Stringer, barge operations for CHS.

“The forecast is that the river level should be down to around 30 feet by next Tuesday, July 8; it’s currently at about 38 feet. Any level above 35 to 36 feet presents some safety issues, from a navigation standpoint, including being able to safely get under all the bridges in St. Louis. Plus the speed of the water picks up as the level rises, so it can be more difficult to navigate as well,” he adds.

The Coast Guard has been meeting with shipping industry representatives regularly, he says, but they have the final say in when the river opens. “A lot depends on whether more rains move through the area, and the five-day forecast has one to two inches of rain predicted for that time period, which wouldn’t be good.”

Locks 20 through 25 are still closed, as well, which are located from Canton, Mo., south to St. Louis. That part of the river could open as soon as Friday or Saturday, barring no more rainfall, notes Stringer.

The closure has had only minor impact on fertilizer movement northward, says Jennifer Lee, barge operations for CHS. “We’ve got a handful of urea barges stuck at St. Louis, waiting to get through to St. Paul, but it’s for summer-fill, and shouldn’t be impacting current supply to the north.”

CHS Business Solutions Consulting begins operations
(7/1/2008)

Today CHS Business Solutions launches its new business that focuses on the people, planning and performance needs of CHS customers. Lynden Johnson, vice president, says CHS Business Solutions Consulting connects CHS members to a vast array of resources that help anticipate and adapt to today’s changing business needs.

Johnson names the following to the CHS Business Solutions Consulting leadership team:
• Lynn Foth, Pontiac, Ill., director of Business Solutions, will lead the development and implementation of the strategic planning and performance resources and will continue to provide leadership for staff in the central and eastern Corn Belt.

• Larry Fuller, Bismarck, N.D., director of Business Solutions, provides leadership to the career planning, CEO/General Manager and management staff placement resources and provides leadership to the western area field team, which stretches from the Dakotas to the Pacific Northwest.

• Jessica Lamker, director of Business Solutions, provides leadership to people development opportunities and to the team that delivers these resources to the employees and leadership of CHS business-to-business partners.

• Steve Eck, Windom, Kan., area manager of CHS Business Solutions, provides leadership to the southern field team serving Kansas, Nebraska, Colorado, Oklahoma and Texas. In addition, he specializes in business and career planning for CHS customers.

• Gary Tomter, Prairie du Sac, Wis., area manager of CHS Business Solutions, leads the northern field team in Wisconsin and Minnesota and provides leadership on long-range planning, unification studies, financial performance, career planning and director and employee development.

Additional Business Solutions team members include Business Solutions managers Curt Abfalter, Jeff Goettl, Ed Gunderson, Darren Hamilton, Brian Kuhl, Gene Lueb, Allen Robinson, and Bruce Younglove; and office team members Dorothy DeTomaso, Sue Nelson and Denise Roy.

In the next few months CHS Business Solutions Consulting will continue to build its team and solutions to best meet the people, planning and performance needs of CHS customers.

Fairmount marks 125 years
(7/1/2008)

The small town of Fairmount, N.D., had a big celebration last weekend to mark its 125th birthday, and Farmers Union Southern Valley and its convenience store on Front Street were right in the thick of it.

General Manager Lynn Nelson says the cooperative had several units in the big parade including an antique bulk truck and its newest tractor trailer rig. In addition to the parade, events for visitors and residents included tours of the town, an all-Fairmount Alumni Social, an old-time dance in the park and a big dance on main street.

The convenience store was also kept busy feeding people because all of the tickets for a meal at the Civic Center were sold out before the event.

“We have Piccadilly Circus Pizza, hot dogs… just regular fare,” says Nelson. “But the guys who come in for morning coffee in the store were predicting a big turnout and they were right.”

Nelson notes that at 125-years-old, the city predates North Dakota statehood by six years. The town was founded by pioneers to supply farmers who had come to the beautiful eastern North Dakota bottomland that promised bountiful harvests.

Fairmount is also the site of one of the wheat mills operated by Horizon Milling, the CHS joint venture.

Market Update from Country Hedging
(6/27/2008)

It was another strong week for the commodity markets. Corn futures set new contract highs for the fourth consecutive week amid continued production concerns associated with the flooding across the Midwest. July corn 2008 finished the week at $7.54 ¾, up 33½ cents from last week’s close. December 2008 corn was up 31½, closing at $7.87.

Soybeans futures also finished the week with solid gains. July 2008 beans finished the week at $15.81 ½, up 49 cents this week. November 2008 futures were up 50½ cents, settling at $15.59 ½. July soybean meal closed at $427.90, up $16.20 in the past five sessions. Meanwhile, July soybean oil closed at $65.57 per cwt; up $1.69 this week.

After trading strong most of the week, Chicago and Kansas City wheat futures finished the week with 28 and 29-cent losses on Friday. Despite these one-day losses, Chicago July was up 29 cents for the week, while Kansas City July was only up 10. This change in the price relationship can be partially explained by the concerns over vomotoxin levels in the hard red winter (HRW) wheat currently being harvested in Kansas. In a board advisory, the KCBOT set the limit for delivery HRW at 4 ppm; this makes the vomotoxin limit in Kansas City equal to the vomotoxin limit in Chicago. This is effective July 1, retroactive to all outstanding receipts. That the same time, Minneapolis July finished the week up 22 cents on Friday, and posted $1.19 gain for the week.

Monday is a HUGE day for the fundamentals of our agricultural commodity markets, with the release of the quarterly grain stocks and the acreage reports. These numbers will be released at 7:30 a.m. Central Time, so stay tuned…

For daily commentaries on specific commodities in grains, energy and livestock, visit www.countryhedging.com.

This information is taken from sources which Country Hedging believes to be reliable, but is not guaranteed by it as to accuracy or completeness and is published here for information purposes only. There is a risk of loss when trading commodity futures and options. Country Hedging Inc. bases its recommendations solely on the judgment of Country Hedging Inc. personnel.

Crop Nutrients adds Market Analyst
(6/27/2008)

CHS Crop Nutrients has hired Kevin Monroe as a market analyst, responsible for providing supply and demand market data and analysis to the product supply team.

He will also compile consumption and logistical market data to sales, facilities management and product management to assist in determining assets required for acquisitions and joint ventures. Monroe will report to Tim Chrislip, director of product management and business development, and David Klima, director of facilities.

Monroe is completing his Ph.D. in applied economics from the University of Minnesota, with a concentration in marketing, management and financial economics. Prior to joining CHS, Monroe was a research analyst with the University of Minnesota and a management analyst for Dakota County Community Services.

Good news in Winona
(6/27/2008)

Minnesota’s Department of Transportation (MNDOT) says trucks should be able to cross the Highway 43 bridge over the Mississippi River to Winona by late summer. That’s welcome news to Wisconsin shippers who transported grain across the bridge to the CHS River Terminal in Winona until it was closed, causing a 100-mile detour.

MNDOT inspectors found rusted gusset plates in key points on the bridge and closed it to all traffic for about two weeks in early June. Cars were allowed again at mid-month, but trucks are still banned. Repair crews are expected to begin reinforcing the rusted plates by mid-July, when traffic will be reduced to a single lane.

Manager Larry Laber says the terminal dumped 40 to 50 Wisconsin trucks a day before the shutdown. The planned re-opening date will give that state’s farmers and elevators sufficient time to deliver grain before the end of the river shipping season in late November.

Drive-offs could be an inside job
(6/26/2008)

Cenex retailers are reporting increased drive-off thefts with gasoline around $4 a gallon, but they are only part of the problem, says Bob Gumatz, CHS retail development supervisor.

“Estimates are between 70 and 80 percent of reported drive-offs are phony,” Gumatz says. “Customer theft is up, but so is employee theft. Think about a 17-year old who’s working at a convenience store to make money and maybe needs a hundred dollars for an insurance payment. Some may think that if they take cash from one fill-up and report it as a drive-off, it will just about cover that payment.”

Retailers can do some common sense things to cut losses, he says.

“First, don’t pre-authorize pumps. Wait for the customer to flip up the lever,” he says. “If you have a PA system, employees should use it to greet the customer with something like, ‘Good afternoon, red car on pump six, go ahead.’ It lets them know they’ve been seen, and it does make a difference.”

Gumatz suggests posting signs warning that a surveillance system is in use and keeping a set of binoculars by the cash register.

“Even if they are ‘Toys R Us’ binoculars, it lets drivers know that the clerk can see them and their license numbers very well.

Employee thefts will always be a problem, but Gumatz has some tips to discourage them. “It’s very important to have an incident report form that the cashier must fill out every time there’s a drive-off,” he says. “And make sure that clerks call the police, even if they don’t respond.”

Having to report a phony drive-off to police will stop a lot of employee thefts, he says. It’s also very important to prosecute all theft and to make sure that employee penalties go beyond simple termination.

“We have six loss prevention modules as part of our ‘STOP Theft of Profits’ program that can be very helpful,” adds Gumatz. Visit Dealer Connection at www.cenex.com or call Bob Gumatz at 1-800-328-6539, ext. 4788, or email bob.gumatz@chsinc.com for more information on the modules and upcoming classes.