Alaron Grains and Oilseeds Comment

CHICAGO - Jan 5/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

CORN: Our weekly export inspection report came out Tuesday showing 34.1 million bushels of corn was inspected for near term export, down from 37.6 the week prior but over a year ago of 31 m.b. Friday's weekly export sales report showed 573 t.m.t. of corn was sold last week. This is a marketing year low but expected due to the holiday closings and less export days but we were slightly higher than a year ago. All demand report took their hit from the holidays but look to return strong again the last half of January. Near term, next week, all pricing will be based on perception of what the Friday 7:30a central time USDA crop report will show. This report could be the most volatile to pricing of the year. Our last report November 9th, put corn production at 10.745 billion bushels with a yield of 151.2 bushels per acre. They always ship a December production update to give the final number on the January report as all fields are harvested. This leave the report to adjust production estimates from what was harvested from November 1st to January 1st. It is my perception that the corn production number will come in lower. Reasons: Indiana had 21% left to be harvested after November 1st. Michigan 35%. Wisconsin 25%. Pennsylvania 25% and Ohio 32%. It is these states that had generally the lowest yields. If this comes to play, it would mean what is taken away from production will come off of ending stocks as well. Ending stocks come September 1, 2007 are already projected to be the third lowest in 30 years at 935 million bushels. If the pre-report trade guesses share this view we could see light buying ahead of the reports release. Conservative traders should approach the report with caution. Consider if your bullish buying a 5 cent out of the money February call option for 8 cents or $400. If bearish a 5 cent out of money February put for 8 cents or due both and bet both sides as this market could make a big move one way or the other.

BEAN:

Our weekly export inspection report showed 19.3 m.b. of beans were inspected for near term export down from 32.6 the week prior but over a year ago of 19.8 m.b. Friday's weekly export sales report showed 338 t.m.t. of beans were sold last week, a marketing year low due to the holiday closings. Next week will be worse due to two government closing days this week but a strong return is expected. Next week's crop report looks to be the opposite of corn. Where late harvested corn states saw lower yields the same states saw higher yields on beans as they benefited for rains that came in the late pod setting stage. The November 9th crop report put bean production at a record 3.204 b.b. with a 43 b.p.a. yield. If that holds true then a higher production number could lead to a higher September 1, 2007 ending stocks number which was last pegged at a record 565 m.b. Like corn, beans too look for a lot of volatility off the report so risk control is rule number one. Consider buying a 10 cent out of the money call for February about 12 cents or $600. or a 10 cent out February put for 12 cents or both. You have 12 cents risk everyday in the futures.

WHEAT:

Our weekly export inspection report showed 19.5 m.b. of wheat was inspected by the USDA for near term shipment up from 13.6 the week prior and 9.9 a year ago. Friday's weekly export sales report showed 135 t.m.t. of wheat was sold last week, a marketing year low off holiday closings. Though we will see some improvement near term, demand overall will remain weak until our new crop comes in next May. Next Friday's crop report could come in neutral with a little bullish and bearish news. The bullish news will be the ending stocks for June 1, 2007. Being so low but the bearish news will be the winter wheat planting numbers which will come in higher, pretty much leaving wheat to trail corn as the leader. The 5 cent out of the money February wheat calls and puts are about 8 to 9 cents and a affordable way for the conservative trader to trade into what could be a very volatile report.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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