Alaron Grains and Oilseeds Comment

CHICAGO - Sep 8/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn- Friday's weekly export sales report showed 913 t.m.t. of corn was sold last week. Not a bullish number but a friendly number. We need to see 1.2 to 1.4 m.m.t. to demand bullish but we are well ahead of last year of 591 t.m.t. Sales to our regular Asia customers were 515 t.m.t. a decent number. The week saw positioning and evening up ahead of Tuesday's 7:30a central time USDA crop report. The longs sold Tuesday, Wednesday and Thursday's open while the shorts bought Thursday's low and Friday's opening. Everyone wants to get more neutral before its release. The average pre-report trade guess for production is 10.996 b.b. up 20 m.b. from last month's report and ending stocks come September 1, 2007 at 1.221 b.b. down 11 m.b. from August and 841 m.b. under this year. If there is going to be a surprise that is bullish it would come in the ending stocks coming in much lower as the government looks ahead to more aggressive usage in ethanol but the government usually is conservative and does not get ahead of itself and uses monthly report to tweak numbers and try and keep themselves from becoming part of the vitality. Everyone wants to be long going into year's end and the first quarter of 2007 as demand is expected to be a strong driving force but first we need to find that harvest low price. Harvest begins next week in some areas but in a big way after September 23rd. If we do not get a report surprise there is still a good chance of December corn pushing down to 2.27 at which time we will begin to get long May futures and options. the demand driven rally will be over by April, leaving futures to trade weather and its impact on May planting and our June, July growing period and we are certain to see a sharp increase in planted acres.

Bean- Friday's weekly export sales report showed 559 t.m.t. of beans were sold last week about equal the week prior but up from 443 a year ago. Key, was China in for 230 t.m.t. with Brazil looking to plant fewer bean acres this month into October, China should be an active buyer of US beans to off set. We have seen longs and shorts bail out this week ahead of next Tuesday's government crop report. The average crop production guess is 3.093 b.b. up 165 m.b. from our August report with ending stocks for next year at 566 m.b. up from 450 m.b. last month. With no surprises we could expect a November futures low of 5.30 to 5.35 before month's end.

Wheat- Our weekly export sales report showed 383 t.m.t. of wheat was sold last week down 12% from the previous week and 5% under a weak four week average. Far below a year ago of 854 t.m.t. No surprise here as higher prices chase demand would be forced to come to US ports on world production shortfalls. Key export competitors to the US have experienced production problems almost as bad as our poor growing season and even worse as seen with the on going drought in Australia. As I noted last week, if demand does not surface soon, we can not sustain the rally off old news. We saw the beginning of the market weakening this week as longs began to sell out. The wild card is India. They are sending signals they need large quantities of wheat. They are more likely to buy lower quality wheat for value like Asian markets. Countries with more poor quality or lower protein wheat than they care to admit are plentiful. No one has an advantage. It leaves us as good a chance as any to garner some of their business but it could be 30-90 days away. India can wait. In the meantime it leaves wheat poised to move lower as focus turns to good rainfall over our winter wheat states as planting gets under way soon. If demand should arise we could take out 4.39 basis December. No demand next week and 3.96 could be tested. The trade looks for a slightly friendly crop report Tuesday.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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