Alaron Grains and Oilseeds Comment

CHICAGO - Aug 8/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn:

Monday's weekly export inspection report showed 24.5 million bushels of corn was inspected for near term export, down from 38 the week prior and 48 a year ago. The recent two week 20 cent rally had importers backing away especially as the crop is made and thinking is out there. The crop could come in over 13 billion bushels, leaving room for lower cash prices at harvest. Monday's 3:00p crop progress report showed we were 96% through our key silking stage of yield development. The crop condition report showed 56% of the crop in good to excellent condition down 2% from the week prior and down for our fifth consecutive week. States with the lowest ratings from the week prior declined further with IN at 44% g-E down 6%. MI 12% G-E down 14. MN 25% down 5 and MO 53% down 5. OH at 40% G-E was unchanged. We are having some rain this week but coverage is confined to the upper 40% of the Midwest grain belt while temperatures all week remain between 92 and 103. States with only marginal rain numbers find no advantage to crops with heat evaporation a key. the trade no look to Friday's USDA crop report for ideas as to what size the crop will be this year now that we are about finished determining yields. The July USDA report pegged corn production this year at 12.840 billion bushels and an average yield of 150.3 bushels per acre. Some private forecasters have come in 300 m.b. over and others 200 m.b. under. Because of the uneven growing weather across the Midwest this year, guesses will be all over the board setting us up for half the market caught by surprise. The western grain belt was too wet early on then too dry, while the eastern grain belt was too dry early on then too wet. We are seeing IN and OH having a hard time playing catch up. Wxrisk.com sees another rain event Wednesday night and Thursday more in the upper plains and as far south as Northern Illinois. Most of the models suggest intense heat through Sunday and a big heat dome August 14th to the 20th. The fear in the market is Friday's crop estimate through large do to increased acres will come in on the lower end of expectations.

Beans

Monday's weekly export inspection report showed 10.4 m.b. were inspected for near term export, up from 9.1 the week prior; but under a year ago of 16 m.b. It is a neutral near term demand signal with some importers being a little aggressive as half the growing period is still ahead and yields uncertain. Monday says prices dip 18 cents on the opening after the only model calling for rain on Friday's close was right. Western and upper plains had better than expected rains over the week end with more called for through Wednesday. If you remember the European, Canadian and Navy models of weather projections were all dry into mid-week while the American model had rain. Well, the American won out. Monday's 3:00p crop progress report showed 56% of the crop in G-E condition down 2% from the week prior and down for the fifth consecutive week. Like corn, beans too saw states with the lowest ratings decline sharply questioning their ability to catch up this late in the growing season. That and intense heat this week offsetting much of the rain led to 12 cent gains Tuesday. The crop progress report put 31% of our crop yet to enter the key pod setting stage leaving weather still our critical pricing element. Friday's USDA crop report should not show a big change either way on bean production from last month as government figures were compiled as of August 1. When the crop was only 51% setting the pod but the usually uneven growing season weather has more people thinking the production number will be on the low end of expectations.

Wheat

Monday's weekly export inspection report showed 25.1 m.b. inspected for near term export, up from 17.5 the week prior and 20 a year ago. Inspections year to date are 157 m.b. versus 143 a year ago. Wheat's new marketing year began June 1. This is no surprise here as I have been reporting for over a month we are in a demand driven market as world stocks of wheat are at 26 year lows with competing export countries continue to suffer poor growing conditions. While the US is the world's number one port world wide for freshly harvested quantity and quality wheat. If they are shopping, they are shopping here. Monday's 3:00p crop condition report showed 69% of the crop is in good to excellent condition, up 1% from the week prior and up 36% better than a year ago. 29% is now harvested. Come and get it, is the cry at US ports. Demand remains our sole driving source. Demand the first two days of this week was slow but Monday's inspection number suggests demand simmers under the surface. Stick to the charts and wait until demand turns flat to sell as eventually price rations the commodity. Support on Sept. CBT Futures lies at 6.50. A close under here then 6.38 is next stop. Put stops at 6.48 near term. Dec. support is 6.70. Get out on a close under 6.70.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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