Alaron Grains and Oilseeds Comment

CHICAGO - Apr 11/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn:

Monday's weekly export inspection report showed 25.4 million bushels of corn was inspected for near term export down from 24.7 the week prior and 36 a year ago. The weaker demand signal suggests importers continue to await lower cash bids after the bearish planted acreage report. Tuesday's USDA monthly crop report put our carry over or ending stocks for the start of the new fall harvest and grain marketing year Sept. 1st at 877 m.b. up 125 m.b. from the month prior and 51 m.b. over pre-report trade guesses and third lowest ending inventory since 1975. The government came to the better stocks by cutting or feed usage. Their reason was that feeders were blending more feed quality wheat into the feed ration as corn was too costly and last year's poor wheat crop left us with a lot of wheat not suitable for milling or human consumption but great for cattle and hogs. We enter this week the same way. Last week ended with the trade buying corn and selling beans as a spread. The wet conditions in the key Midwest producers do not allow for planting to begin. WXRISK.COM sees rain the next 48 hours, then again this weekend and possibly the middle of next week. this all lends to the traders mindset that if this pattern continues into May we could plant less corn and more beans. The first twist in the jet stream to a drier pattern and unwinding of the spread will give us a sharp drop in corn.

Bean-

Monday's weekly export inspection report showed 20.1 m.b. of beans were inspected for near term export up from 19.5 the week prior and 9.6 a year ago. We have seen sales soften the last several weeks as South America's harvest and exports over take us seasonally until June 1st. Sales are consistently over a year ago. Tuesday's USDA crop report put carry over stocks at 615 m.b. up 20 m.b. from the month prior. pre-report trade guesses looked for 9 m.b. less. The government believes record crops out of Brazil will be dumped on the world market. I disagree as much of it will be kept home for bio-fuel needs. Beans pricing volality is all weather. Traders are selling beans and buying corn as corn is planted in April and wet conditions look to keep planting at a standstill suggesting we could see more bean acres seed if the corn planting window closes for some growers. Like corn, beans too look a sharp up day when the weather finally turns in favor of corn getting planted. Only the American weather model as of today suggest a warmer, drier pattern next week. It will all come to vision by Thursday and Friday. November finds support at 7.84 then 7.76. When the spread unwinds we could push back to 8.20

Wheat-

Monday's weekly export inspection showed 12.7 m.b. of wheat was inspected for near term export down from 17.8 the week prior and equal a year ago. No change in export psychology as importers await late May when they hope for a high quality and quantity winter wheat crop. it is the winter wheat crop that mainly goes to exports. Though it is lower protein than the spring wheat variety its perfect for bread making and bread is the staple of the European diet. The spring wheat now being planted generally stays home for US millers to use for cereals and pastas. Tuesday's USDA crop report put carry over stocks at 422 m.b. down 50 m.b. from last month and 27 m.b. under pre-report trade guesses. Needless to say we are feeding more poor quality wheat to our livestock population and less corn. In part, the price is right as the spread between corn and wheat is under one dollar. However, feed quality wheat not suitable for millers is ready at a bargain as wheat growers are cleaning bins ahead of the beginning of the winter harvest mid to late May. The crop condition report put our winter wheat crop at 64% good to excellent condition down 7% from the week prior with Kansas our number one producer at 55% G-E down 22% due to the weekend freeze in the western plains. this all led to higher prices to start the week. Conditions are still well ahead of a year ago of 41% G-E.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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