Alaron Grains and Oilseeds Comment

CHICAGO - Aug 4/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn~ Today Thursday, we started with our weekly export sales report showing 900 t.m.t. of corn was sold last week down 8% from the week prior but 34% over our four week average. Asian sales were good at 460 t.m.t. It is a friendly demand indicator but not bullish as 1.1 or 1.3 m.m.t. would suggest. About 70% of our Midwest corn belt states received rain since Tuesday. The driest areas with the lowest ratings in the western corn belt received the least while higher rated crops in our eastern corn belt received the most rain. Monday's crop condition report should shower better ratings in Illinois, Indiana and Ohio while Iowa, Nebraska and the Dakotas lower. Collectively my guess is Monday's crop condition report at 3:00p central time will come in unchanged to down 1% in the good to excellent category. Some weather sites see next week as warmer and drier than normal, but wxrisk.com says there could be rain in northern Midwest regions Monday and Tuesday and only 2 or 3 days of hot weather. I still like the options on Sept. that do not expire until Aug. 25th. Buying the Sept. 2.50 call for around 5 cents or $250. and buying the 2.45 put for 5 to 6 cents. Either weather or next Friday's monthly USDA report is surely to make one side or the other profitable. This crop is about made now as this week should finish pollination and Monday's crop condition report had corn, though down for our third week, still rated 3% over last year's record yield crop. Everyone wants to think that the excessively hot summer is killing the crop but as we learned last year during a severely hot and dry stretch between mid-June and mid-July our bio-genetic seeds due very well and seen to not be bothered by the heat and need less rain. In part it is because ground moisture is held better with the bio-genetic crops as we no longer can see down a corn row as their planted closer as we do not need to cultivate as the seeds abate weeds and insects. The tighter rows create a canopy effect shading the corn and bean pods and top soil.

Bean~ Thursday's weekly export sales report showed 177 t.m.t. of beans were sold last week off 11% from the week prior and 27% under our four week average. Asian sales were weak at 100 t.m.t. and key player China in for only 56 t.m.t. Everyone is disappointed at how poor US bean sales have been lately. Demand remains a non-pricing fundamental. Beans so far this week, have traded in whatever the days weather forecast said. Monday saw 6 cent gains in anticipation of a Monday 3.00 p.m. bullish crop condition report and intense heat over the week end and through Monday. Tuesday saw 6 cent declines as weathermen called for our heaviest Midwest rains of the growing season by Wednesday and Thursday. Wednesday saw 6 to 7 cent gains as forecasts saw far less rain in the western grain belt than expected while Thursday saw 6 cent losses in the opening range as eastern grain belt rains were greater than expected. Well, this week's changing weather and volality is behind us and we now focus on next week. As of today Thursday, three quarters of the weather gurus see next week setting up to be hotter and drier than normal starting Wednesday but wxrisk.com sees some rain early week and only several hot days and no heat dome threat. Of course that can change by Friday or Sunday. We have until August 20 to 25 to fully developed the pod and yields. support on November futures lies at 5.95 and resistance 6.15 to start. Long term fundamentals remain bearish but we have a 60% chance of another weather rally before August 20th. Even though quality levels have declined three consecutive weeks the crop is at least equal to last year crop at this point and we ended up with record yields. Bio-genetic seeds love the heat and need less rain as the bean leaves with tighter rows preserve top soil moisture better. Traders will be expected only a small downward adjustment in next Friday's USDA crop report but it will still be a record.

Wheat~ Thursday's weekly export sales report showed 583 t.m.t., were sold last week up26% from the week prior and 80% over our four week average. Egypt was in for 115 t.m.t. We need 650 t.m.t. sold to be price friendly, but harvest of spring wheat underway is having some demand surface as well as prices being 70 cents lower since July 13th. Unless demand surprises us by returning in a big way things still look lower as spring wheat harvest progresses through Aug. Our best hope for demand can come from Asian markets as they maybe interested in low quality feed wheat. They are more concerned about quantity than quality and were loaded with low quality wheat; thanks to a poor winter and spring wheat crops. Until then September MN wheat is a sell at 4.80 then 4.88 with stops above 4.90. Next support is 4.62 then 4.50.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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