Alaron Grains and Oilseeds Comment

CHICAGO - Aug 1/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn~ The week began with Monday's weekly export inspection report showing 43.2 million bushels of corn was inspected for near term export down from 51.9 the week prior but over a year ago of 37.8. Year to date inspections are 1.826 b.b. versus 1.566 a year ago. Though lower on the week were still seeing solid demand for corn. After the close our crop condition report Monday showed 56% of the crop was in good to excellent condition down 3% from the week prior but 3% over last year's record yields. IL was unchanged with IN up 1% and MI up 7%, while western corn belt states declined with IA down 5%, NE off 1%, KS down 5 and MO off 9% from the week prior. We are 91% through pollination leaving our critical development time running down now. Yes, we were off for the third consecutive week but we are still over a year ago with adequate ending stocks. Corn settled up 1.6 cents Monday and 1 cent higher on overnight trading on the excessive heat over the week end. The lower crop rating but Tuesday saw a 1.7 cent decline after the open as the driest areas of the western corn belt. Look to receive considerable rain Wednesday to Friday of .50 to 2.50 inches over 70% coverage and temperatures in the eighties through next Monday. We turned up late on talk that the extreme heat over the week end and through today may have caused more stress or damage than Monday's crop condition disclosed. Well, that is to be seen in next week's update but most traders believe if these midweek rains come as expected we are poised for a quality increase next Monday. Looking into next week wxrisk.com sees a potential for the heat and dryness to return to the grain belt by Wednesday, August 9th. The September option expire on the 25th of August leaving plenty of time to profit from. You can play both sides comfortably with the 2.40 put at 5 cents and the 2.40 call 6.5. Timely rain in august and September futures could fall to 2.30 to 2.25 area and or with a return to record heat and dryness and 2.55 becomes upside resistance.

Bean~ Monday's weekly export inspection report showed 7.9 m.b. of beans were inspected for near term export down from 10.8 the week prior but over a year ago of 3.2. Year to date inspections are 870 m.b. versus 1.045 b.b. Demand remains somewhat weak leaving beans to totally focus on weather. After the close our crop condition report showed 53% of the crop in G-E condition down 1% from the week prior and 54% a year ago. IL, IN and OH were all gainers while IA, NE, MO, KS and ND lower. 53% of the crop is in its key pod setting stage versus the five year average of 41%. Ok, the eastern belt look good while IA west looks bad. We are down for the third straight week but only 1% under last year's rating that led to record crops and yields. The reports not bullish but with half our key yield developemnt time ahead of us it is not bearish either as conditions can decline if weather is bad. The western grain belt states that declined for the third consecutive week look to receive from .50 to 2.50 inches of rain Wed. to Fri. over 70% coverage. This kept beans under pressure all day Tuesday. Keeping beans from falling apart was talk of a return of a heat dome and dry conditions by the middle of next week leaving this week's rains critical to the crop as benefits could be lost if we return to an extended hot and dry period the rest of our pod setting stage through Aug. 20th. Worst case scenario this week for Nov. beans if 5.80 to 5.85 with up side resistance at 6.00. I will take short side profits under 5.85 and go long into next week's hotter drier conditions.

Wheat~ The weekly export inspection report showed 11.8 m.b. of wheat was inspected for near term export off from 18.7 the week prior and 24 a year ago. Since the new marketing year began June 1st, demand or inspections are down 16 m.b. Demand looks to remain off as spring wheat cash harvest pressure continues into late Aug. Monday afternoons crop condition report put spring wheat at 32% in G-E condition down 2% from the week prior and way under a year ago of 68%. Harvest has begun at 22% complete. The growing season is effectively over leaving further crop conditions for less important to pricing. A lot of rumors circling about demand to soon surface but until it does the down side is the path of least resistance. After closing up 8 cents Monday on Sept. MN exchange futures, Tuesday saw 9 cent declines into midsession off condition numbers better than expected. Resistance on Sept. lies up at 4.86 with support at 4.62.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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