Alaron Grains and Oilseeds Comment

CHICAGO - Sep 15/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn- Our weekly export sales report came out Thursday showing 669 t.m.t. of corn was sold last week, off 27% from the week prior but over a year ago of 547. About every fourth or fifth report we have a down week, yet demand continues to far exceed a year ago. Asian business was good at 350 t.m.t. After getting the bearish crop production report we called for on Tuesday we pushed to within 2 cents of contract lows of 2.34 basis December futures. The question now is will we take out 2.34 and push to our long term objective of 2.27 to 2.20. It is still a reasonable objective as the corn crop is getting bigger and early harvest reports may show better yields than thought. Near term a threat of northern tier frost early next week and harvest delaying rain may bring on some short covering. Maximum upside resistance is 2.44. It will take a close above here to turn market friendly. If we can take out 2.34 then our goal of 2.27 or lower will present a dream trade to begin buying May futures and bull call option spreads for a demand driven rally into December followed by a January dip then a February to March rise to finish.

Bean- Thursday's weekly export sales report showed 741 t.m.t. of beans were sold last week up 32% from the week prior and over a year ago of 595. The key for the big week was China in for 311 t.m.t. I have been noting on my prior reports that bean demand seasonally picks up in October. Reason, South American beans are growing, their export season from old crop is over and foreign importers turn to the world's next port of plenty and value. That is us, as our new crop harvest has cheap beans everywhere through November. China's moving to us sooner as there are questions about Brazil's production this year coming in smaller on fewer acres going to seed by local growers unable to get government assistance. I am sure they will plant but China uses the US to fill fall needs and as a hedge against a poor South American growing season into late February, China will begin to cancel previous US purchases for futures shipment. that is the game played every year but in the mean time demand looks to improve into year's end. Near term, we saw a bearish crop report Tuesday push beans to new contract lows before profit taking came in on two fronts. One, oversold conditions and huge short profits and two, talk of a possible frost in our northern tier states Tuesday. Corn can not be hurt as it is fully mature but beans could suffer damage. Failure of frost to rally beans, I will look to be a seller again next week with an impending harvest to push November beans down near 5.30.

Wheat- Thursday's weekly export sales report showed 337 t.m.t. of wheat was sold last week, down 12% from the week prior, 16% below our four week average and under a year ago of 585 t.m.t. when wheat saw its short covering rally back to 4.29 basis December futures. I said if we could not sell US wheat when it was 3.90 two weeks prior, we will not sell it now over 4.20. That is all the talk about India's needs and export competitor Australia's drought could not sustain the rally, that demand would have to surface. I explained on my reports about the US being a third or fourth port of origin for wheat and why prices had to move lower to price low quality feed wheat into the Asian feed market. High protein winter milling wheat for human food consumption was either purchased by US millers who could not find high protein wheat after our bad spring wheat crop. Hard red winter wheat used mainly for exports was tightly held by growers on the farm at prices well above cash elevator quotes, leaving the US priced out. I noted the near record wheat price spread over corn and its probability of narrowing. All these thoughts of research have come to the market with December futures dropping from the 4.20 to 4.29 area to under 3.90. Price rations commodity. We can not lose site of that, over the emotions of other countries problems. those who followed our research we are greatly reworded. Other than a short covering rally or demand surfacing we look for December futures to push to 3.78 near term and possibly 3.40 long term.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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