Alaron Grains and Oilseeds Comment

CHICAGO - Jun 13/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn:

Our reports on Monday were plentiful. Report one, was our weekly export inspection report showing 27.8 million bushels of corn was inspected for near term export down from 39.1 the week prior and 41 a year ago. Year to date inspections are 1.597 b.b. vs.. 1.515 a year ago. We hit five week highs on prices last week leading to importers backing off a little. Long term demand remains bullish but importers look to pick their spots. Monday's pre-opening USDA crop report had no surprises. They left production unchanged at 12.460 billion bushels from the month prior as corn is too early in its stage of development to increase or decrease yield potential. They put carry over or ending stocks for the start of our new grain marketing year Sept. 1 2007 at 987 million bushels up 50 m.b. from our May report as they cut exports and our Sept. 1 2008 at 997 m.b. up 50 m.b. as well. These are the fifth lowest ending stocks numbers since 1975. Unless corn goes high enough in price to discourage over-consumption or steal away 4 or more million acre to add to planting next year, we can expect the stocks to decline as demand for ethanol continues to expand into 2012. As mandated by the US government, and weather threats as we are seeing in our eastern grain belt and next Monday and Tuesday, we could get a big eastern grain belt rain. The usually dry and accurate European weather model sees rain. If this occurs we will go from over both to over sold quickly but as always one dry week like this week does not kill a crop and one wet one does not make a crop. I would welcome a weather break as a good long term buying opportunity. Worse case scenario on Dec. corn futures if the rain come is 3.78 to 3.82 area. Next resistance is 4.16.

BEAN-

Monday's weekly export inspection report showed 10.8 m.b. of beans were inspected for near term export up from 6.1 the week prior and 8 a year ago. Year to date inspections are 987 m.b. vs.. 806 a year ago. Contract high prices did not scare buyers away as fear over 8 m.a. fewer planted this year and ending stocks cut in half for 2008 has importers thinking we are under valued and we are cheaper now than later. The USDA crop report put our Sept. 1 2007 carry over at 610 m.b. unchanged from May and our Sept. 1 2008 ending stocks at 320 m.b. unchanged as well. With the crop having 20% of the acres yet to be planted as of last Monday, it to early to adjust carry over. World ending stocks were put at 54 m.m.t. for 2008 vs.. 63 this year. Nothing in this to get excited about on this report near term, but long term it is very bullish as it says beans have to go high enough to buy back acres it lost this year. Or the 320 m.b. carry over for 2008 will be zero in 2009. After the close Monday, our crop progress report showed 94% of the crop is planted with 70% in G-E condition down 1% from the week prior and 3% over a year ago. Like corn, we are too early in development for yield concern leaving us to trade weather fears near term. with the hot and dry conditions expected through Sunday, if next Monday and Tuesday's rain fails to appear we will test 9.00 basis Nov. if the rain comes we will be lucky enough to buy long a pull back to 8.30 to 8.38.

WHEAT-

Monday's weekly export inspections report showed 8.2 m.b. of wheat was inspected for near term export, down from 16.7 the week prior and 13 a year ago. After a big rally last week and 60 cents up since May 21, and harvest supplies hitting the market it makes sense demand would soften a little. It is harvest time for winter wheat and this is when foreign calendars say turn to the US and buy, so demand though off on the week should remain overall good with a lot of domestic demand to fill millers empty bins here. The USDA crop report was supposed to be slightly bearish with pre-report trade guesses for an increase in production over the May report but as I noted on my Friday report- watch out for a bullish surprise as weekly crop rating have been down giving the government room to adjust us downward. Well they did putting all winter wheat production at 1.610 b.b. down from 1.616 in May but still well over last year's 1.298. They also lowered US carry over stocks for next year by 26 m.b. to 443 m.b. This just tells us that even though we are having a much bigger crop this year, demand and previously low inventories look to keep inventories low through June 1 2008 the beginning of wheat's marketing year. Monday's crop condition report for spring wheat came in at 81% G-E condition down 4% from the week prior but 14% over a year ago and a very high rating. Only 3% of the crop has the head developed. Our spring wheat crop will be made or lost between July 1 and 20. The winter crop declined 1% to 52% G-E but over a year ago of 29%. We are fully developed and harvest is at 5% complete. Wheat's big rally this week came as a series of bullish fundamentals collided. Strong demand signals, a smaller crop on our monthly crop report and talk of further dry weather problems in wheat fields of Russia, Australia and China. Needless to say, we are over bought leaving longs staring at the chart gap on Dec. CBT wheat between 5.62 and 5.70 but the weather reports have significant rain for the western wheat belt next Monday and Tuesday leaving number one wheat producing state Kansas facing further crop problems on quality as too much rain lends thought to disease. Wheat wants to get harvested but the western plains rains are preventing it.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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