Alaron Grains and Oilseeds Comment

CHICAGO - Mar 9/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

CORN:

Thursday's weekly export sales report showed 1.188 m.m.t. of corn was sold last week, up from 318 t.m.t. the week prior and 10% over a strong four week average. A year ago sales were 867 t.m.t. so, overall we saw a nice improvement on demand in part to our sharp price correction last week. Normally we look to Asian sales to determine demand strength as over 70% of our exportable feed grains go to Asian countries but this week's key player was Mexico in for 631 t.m.t. of the total. The drought in Mexico the last year has cut their corn crop dramatically forcing costs of one of their primary food staples tortillas spiraling upwards. We can not expect them to be a weekly buyer but current drought conditions look to have them back. Friday's U.S.D.A. monthly crop report put carry over stocks or inventory of corn to be left over at the start of our new grain marketing year September 1, 2007 at 752 million bushels. Unchanged from the month prior, well under last year of 1.967 billion bushels and the second lowest ending stocks figure since 1975. Needless to say this puts major importance on the March 30th planted acreage report to show enough corn acres will be planted to insure we do not run out of corn in 2008. Next week is wide open for market opinions driving prices as there is no key supply demand report out and we are three weeks from our March 30th planted acreage report, so corn will look to outside sources to start the week. If Sunday night unveils a bearish Asian stock situation the grains will trade lower on fear of spill over sentiment to U.S. stock markets. Index funds taking profitable long grain positions off. If they see a neutral situation then May corn finds strong support at 4.14, a close under here is technically fatal. December support is 4.04 then 3.94 as critical. Do not hold any longs on a close under support.

Bean-

Thursday's weekly export sales report showed 566 t.m.t. of beans were sold last week up 36% from the week prior, 3% over a strong four week average and over a year ago of 345 t.m.t. China is the key world buyer and usually this time of year they begin to cancel previous U.S. purchases and switch to Brazilian soy beans as there generally cheaper. With brazil about 30% harvested we are not seeing the cancellations. China's demand for high protein vegetable oil crops like soy beans is so great it appear that they will keep U.S. purchases and continue to buy as well as purchasing Brazilian beans. At least so far this is what is happening: Friday's USDA crop report put carryover stocks for Sept. 1, 2007 at 595 million bushels, unchanged from the month prior and over last year's 449 m.b. No surprise here. Like corn, beans too await Monday to review any Asian, U.S. stock situation before re-entering. Bean traders want to be long into our March 30th planted acreage report but they have 15 market days to get get positioned and risk. May finds minor support at 7.50 then 7.30 while November futures find minor support at 7.88 then major at 7.70. Buy dips as we could see new highs ahead of March 30th.

Wheat-

Thursday's weekly export sales report came in at 421 t.m.t. of wheat sold last week up 31% from the week prior as Asian markets came in for feed quality wheat on the big price break, but we were 10% below a weak four week average. Demand should continue weak until new crop supplies come to harvest in May. WXRISK.COM the weather site sees our hard red winter wheat crop states as being very warm this week end through next week as well as dry. This should trigger some areas to break dormancy and begin their growing cycle. Those to break dormancy first will be Texas, Oklahoma and Colorado. Kansas and the Dakota's look warm but ground temperatures remain cold. By month's end we will be in a weather market for wheat and it will no longer be a follower to corn and beans. The U.S.D.A. will begin to release its Monday crop condition reports the first week of April. The wheat futures will trade that report number big time as well as any current weather update. Between now and then, we look for traders to begin to start trading the hard red winter wheat futures on the Kansas City Exchange heavily. Avoid the traditional seasonal spread this year of buying the K.C. wheat and selling the Minneapolis exchange spring wheat futures as the March 30th planted acreage report may show a drop in spring wheat futures to be planted in May as corn steals them away. This could give Minneapolis futures as a pop up in prices killing the spread. Focus on being long July K.C. futures on breaks with a May K.C. put for downside protection. Friday's USDA crop report put ending stocks for the beginning of wheat's new marketing year June 1, 2007 at 472 m.b. unchanged on the month and under our 2005, 2006 year of 571. It is overall a tight ending stocks number putting pressure on this year's winter and spring wheat crops to be big producers to replenish empty bins with high protein milling wheat. July C.B.T. wheat futures have support at 4.80. K.C. July futures find support at 5.00 then 4.90. To close under 4.90 we would have to see great weather conditions and timely rains lending talk of good emerging crop conditions. Again, weather and its actual and psychological impact on wheat will increasingly become the driving force.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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