Alaron Grains and Oilseeds Comment

CHICAGO - Oct 6/06 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn- Thursday's weekly export sales report showed 1.258 m.m.t. of corn was sold last week, up 40% from the week prior with Asian sales at 510 t.m.t. versus 400 t.m.t. the week prior. Demand remains strong on exports but all eyes await harvest to see if newly built ethanol plants move in and buy large quantities of cash corn. Corn spent the week moving higher on strong near and long term demand fundamentals as harvest supply side fundamentals as harvest supply side fundamentals remain on the side lines as wet conditions had our key Midwest producers less than 10% harvested. Many believe once harvest begins in earnest better than expected yields will prevail and the market will move from overbought demand numbers to a lower supply side price. Needless to say, if yields come in under expectations December futures will push to 3.00 quickly. Harvest appears to be moving quickly from Thursday through Sunday and next week looks generally drier. We also have our monthly USDA crop production report next Thursday. Without our trade guesses out yet, we might assume a higher production number. Good harvest and a bearish report could have funds peel back some of their massive long position with a test of 2.62 on Dec. futures with 2.54 as worst case scenario. On the other side, a disappointing yield and friendly crop report we will take out 2.79 with 2.85 as next stop. 2.62 is key support for corn.

Bean- Thursdays' weekly export sales report showed a whopping 1.194 m.m.t. of beans were sold last week up 38% from the week prior and well over last year's 541 t.m.t. China was in for 570 t.m.t. as I have said for over a month now, demand will stay strong for beans through Jan. 20th as China and other Asian countries fill high protein needs with US beans due to South America's crop export season being over and the US harvest floods in with beans a dollar under summer highs. On Jan. 20th the new South American crop will be almost through key yield development with harvest ahead leaving importers turning to buying their beans for March to June shipment as well as china cancelling some previous US purchases. This week saw Nov. beans hit 5.40 only 2 cents from contract lows for the year but Wed. saw a 30 cent up move in wheat pulling beans up 15 cents. Thursday gave us our bullish export sales number, pulling us through resistance leaving the technical picture to suggest lows are in. Like corn, beans too still have harvest to unveil bigger than expected yields as well as next Thursday's USDA crop report expected to show a as high as a 200 m.b. increase in production over last month. This could have us pull back to the 5.45 area. Of course, lower yields and downside bets are off. Nov. has support at 2.44 with resistance at 5.70. A close over 5.70 then 5.94 is next stop.

Wheat- Thursday's weekly export sales report showed 377 t.m.t. of wheat was sold last week down 8% from the week prior and under a year ago of 475. Demand remains the weak fundamental in wheat especially with the higher supply side motivated prices. Some forecasters keep calling for demand to surface to assist low inventory strength but our projection of demand not being a positive pricing force has been correct. Wheat prices have closed high for 3 consecutive weeks while our Monday export inspection reports and Thursday weekly export sales reports have declined 3 consecutive weeks. The higher supply side concerns takes us, the lower our exports and demand. So, stay focused on world supply side news for strength and not demand. The last two weeks have brought a frost in Brazil's wheat fields, drought in Argentina's fields and continued drought in major world exporter Australia. Rains came to Argentina this week but Australia remain dry with talk that their next estimate could be 2 to 3 m.m.t. under their last one. With 25 year low on world stocks, another cut in production would hit that price nerve and again give us that 12 to 22 or better cent daily rally. For Dec. CBT wheat to turn bearish on the charts we would need a close under 4.50 through Tuesday. A close under would set up up to test 4.35. 4.87 remains strong resistance.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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