Alaron Grains and Oilseeds Comment

CHICAGO - Jan 12/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

CORN-

Thursday's weekly export sales report came out showing 1.176 m.m.t. of corn was sold last week up from a holiday low the week prior of 573 t.m.t. and 7% over a strong four week average. We were also over a year ago of 631 t.m.t. I was pleased it was as high. Asia was the key player in for 344 t.m.t. Demand looks to get stronger late January as holiday slow downs are begin us. Demand looks to get stronger late January as holiday slow downs are behind us. Today, Friday ahead of the opening our USDA crop report unveiled a few treasures. The final 2006 corn production figure came in at 10.535 b.b. down 171 m.b. from traders pre-report trade guesses 210 m.b. under our last report in November and under our 2005 crop of 11.112 b.b. Carryover or ending stocks for Sept. 1, 2007 new marketing year came in the third lowest since 1975 at 752 m.b. down 141 m.b. from pre-report estimates and 183 m.b. under our last report. There was no surprise to us as my Jan. 5th report broke down all the eastern grain belt states as to how much they had left to harvest and those would be our lowest yielding acres. The answers to this report was all in the Nov. crop progress and condition weekly reports and we gave that to you. That being said, the rest of the industry was caught by surprise and this led to limit up 20 cents on the open. Those that bought the Feb. call options on my recommendation should manage their profits now closely as the options expire Jan. 26th. This report confirms again just how bullish the long term corn picture is as ethanol production continues. To expand leaving funds and commercials consistently under estimating usage.

BEAN-

Thursday's weekly export sales report showed 589 t.m.t. of beans were sold last week up 74% from the week prior but 22% under our four week average while coming in over a year ago of 448 t.m.t. The key here was main world importer China was in for 252 t.m.t. versus 230 the week prior. I get nervous over China's demand for US beans as we get into late Jan. as traditionally they over book US bean then when South Americana's bean crop looks made late Jan. they begin cancelling US shipments and switch purchases to Brazilian ports where beans are cheaper. We have to watch this. Friday's USDA crop report came out. It put our final bean production at 3.188 b.b. off 47 m.b. from pre-report guesses and 16 m.b. under out last report but 125 m.b. over 2005. Carry over or ending stocks were put at 575 m.b. off 11 m.b. from pre-report but 10 m.b. over our last report and a new record inventory. It was not a bullish report but with corn up limit beans continue to follow in hopes of calming talk of bean acres going to corn this spring. So, where corn was more bullish than traders expected, bean were less bearish than expected. Though beans look the most bullish of all the grains into next fall we have to stay poised or ready for pre-planting corrections of new crop high rallies.

WHEAT-

Thursday's weekly export sales report showed 244 t.m.t. of wheat was sold last week up from 135 the week prior but 31% under a weak four week average. Next week's sales will be better as it will show this week's big Iraq sales but the demand picture overall is weak for pricing. Friday's USDA crop report was released. Carry over or ending stocks for the beginning of wheat's new marketing year June 1, 2007, were put at 472 m.b. up 16 m.b. from pre-report estimates, 34 m.b. over our last report but 99 m.b. under last June 1. Planting of our winter wheat broke down like this: white wheat 3.9 m.a. versus 3.850 last year. Soft red 8.3 versus 7.385. Hard red 31.9 versus 29.340. All winter wheat combined at 44.089 m.a. versus 44.200 on pre-report guesses and 40.575 in 2006. There was really nothing bullish here yet wheat rallied 20 to 28 cents in the early range on two issues. One it always remain a followers roll to corn and beans and two, weather in the winter wheat states into Sunday looks threatening. WXRISK.COM the weather site sees single digit temperatures over much of our winter wheat areas where young wheat lying dormant is without a snow cover to protect it. A major ice storm is hitting Texas and Oklahoma today. It is hard to damage wheat as its weed stage and very durable yet the market trades fear before fact and with WXRISK.COM calling for more arctic cold into month's end it leaves shorts nervous.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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