Alaron Grains and Oilseeds Comment

CHICAGO - Sep 13/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn- Our reports began yesterday, Monday, with our weekly export inspection report showing 47.6 million bushels of corn was inspected for near term export up 3.m.b. from the week prior and 30 m.b. over a year ago. This is a very friendly demand signal as it comes ahead of harvest when cash pressure drives prices lower. Be patient, as harvest pressure still lies ahead before demand fundamentals become our sole driving force. Monday's crop condition report showed 58% of the crop is in good to excellent condition unchanged from the week prior but 8% over a year ago. The crop is essentially done growing. Yields can still come in higher but we need to get at least half through harvest to see if yields are better or worse than government report suggest. Harvest is at 6% complete. Tuesday's USDA monthly crop production report put corn production at 11.114 billion bushels, up 138 m.b. over the August report and 2 m.b. over a year ago. Carry over stocks or ending inventory as of Sept. 1, 2006 was put at 2.012 b.b. 50 m.b. under August. They put next year's 2007 ending stocks at 1.220 b.b. down 12 m.b. from August. They raised exports but are clearly waiting for harvest cash sales to ethanol producers before adjusting potential corn to ethanol disappearance. World ending stocks were put at 92.3 m.m.t. versus 126 in 2006. the long and short of this report is the crop in front of us is getting bigger, while long term demand fundamentals stronger cutting next year's inventory. Once we identify our harvest low, demand will be a formidable driving force. December futures have first support at 2.34 then 2.23. We need a close over 2.46 this week to turn technically bullish.

Bean- Monday's weekly export inspection report showed 9.8 m.b. of beans were inspected for near term export, down from 12.3 the week prior but 4 m.b. over a year ago. Again, demand is not bullish yet but it is clearly improving. Harvest pressure still lies ahead. Monday's crop condition report showed 60% of the crop is in G-E condition up 1% from the week prior and 6% over a year ago. 27% are dropping their leaves, the last phase before harvest. It suggest that the crop still has a chance to get a little bigger in September with better production numbers for our October USDA crop report. Tuesday's USDA monthly crop report based on weather up to Sept. 1 suggested a crop size of 3.093 b.b. This was 165 m.b. over the August report and 7 m.b. over last year. They put our 2006 ending stocks at 485 m.b. and 2007 at 530 m.b. up 80 m.b. from August; the second highest ending inventory on record. With a bigger crop in August and improved quality levels for the first week of Sept. and harvest yet to begin, you wonder how beans can not push lower on supply rising concerns. November has support at 5.30 and upside resistance at 5.50.

Wheat- Monday's weekly export inspection report showed 9.6 m.b. of wheat was inspected for near term export, down from 21.7 the week prior and 16.3 a year ago. Year to date inspection since June 1 are 222 m.b. versus 253 a year ago. Another clear sign of our continued weak demand picture. Monday saw prices off 5 to 8 cents as India's long awaited offers to buy wheat left the US out of the picture. US wheat high enough in protein for milling purposes remains too high to compete against foreign ports for exports. Reason, after a poor winter wheat growing season, we saw even a worse growing season for our spring wheat crop. It is US millers who buy the spring wheat for domestic use, while the winter crop generally lower in protein and mainly goes to the export market. US millers were forced to move in and buy up most of the available high protein wheat off the winter wheat crop, leaving farmers with high enough protein wheat to meet export standards locking it up on farms for bids well over the daily cash offers. I have Kansas growers saying they get knocks on the door from commercial interest willing to pay 30 to 80 cents a bushels over posted cash prices for this highly sought after wheat. This leaves very little at fair value for exports setting prices up to move lower and price low quality feed wheat, which there is plenty, into the Asian feed market. Monday's crop progress report put the planting of this year's winter wheat crop at 9% complete. Planting will be complete by October 5. We will grow the crop until dormancy sets in early November. It lies dormant until about March 1 then matures into our late May, June harvest, April and May is when yields are mad and lost but historically low ending stocks will have traders watching weather and its impact on emerging wheat before dormancy sets in as this is the most important wheat crop in many years as growers look to plant more acres and hope to fill empty bins with high quality milling whet and see foreign imports return to our ports after two consecutive poor growing seasons. Tuesday's USDA crop report was no surprise. They lowered our ending stocks for the start of our new wheat marketing year June 1, 2007 to 429 m.b. versus 434 last month and 568 m.b. this past season. World ending stocks were put at 126.4 m.m.t. down 2 m.m.t. from August and 145 m.m.t. in 2006. this was all expected and the markets done trading supply side fundamentals as demand fundamentals are the driving force this had Dec. wheat up 2 cents in early trade and down 8 at mission. Dec. wheat finds first support at 4.02 then 3.84. We need a close over 4.24 to turn technically bullish.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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