Alaron Grains and Oilseeds Comment

CHICAGO - Aug 10/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn:

Thursday's weekly export sales report showed combined sales of corn for our old crop year and new crop year beginning Sept. 1 at 1.3 m.m.t. Asian sales were good but not great. It shows demand from foreign end users suggest they see current prices at fair value. Friday's USDA monthly crop production supply demand report put corn production at 13.054 billion bushels up 145 m.b. over the average pre-report estimate. 214 m.b. over the July estimate and 2.519 b.b. over a year ago. They put ending stocks for Sept. 1, 2008 at 1.516 b.b. vs.. 1.137 this Sept. 1, which is the beginning of our new corn and bean marketing year. Here is what you should read into this: The government is saying that after July, unveiled a pretty uneven growing month for weather with too hot and too dry their we still improved yields. It could be the USDA way of saying the expanded usage of bio-genetic seeds will do better under conditions, old seed failed in. Traders will expect to see the crop get larger into harvest. Corn moves to a followers roll to soy beans as beans move into the final two weeks of their yield development and follow wheat to a lesser extent. Wxrisk.com sees next week after this week end's high heat, moving to cooler with rain by mid-week.

Beans

Thursday's weekly export sales report put old and new crop year sales of beans at 520 t.m.t. with key world buyer in for the second consecutive week with 115 t.m.t. It is a friendly near term demand signal. Friday's USDA crop report projected bean production at 2.625 b.b. unchanged from last month.

28 m.b. under pre-report trade guesses and below a year ago of 3.188 b.b. just as I thought, with the crop only half way through its yield development time come August 1. This is when numbers were compiled, the USDA new production could yet improve or unimproved appreciably into Aug. 20th, when all the pods will be developed. They put ending stocks for Sept. 1, 2007 at 575 m.b. and ending stocks for Sept 1, 2008 at 220 m.b. Long term, come Feb, march and April we could expect prices to move much higher again as beans frantically search for a price high enough to encourage farmers to plant 4 m.a. more minimum. With acres at 64.081 m.a. this year off 11 m.a. from last year, our usage cut ending stocks from 575 m.b. to 220 come Sept 1, 2008; or down 355 m.b. If we plant the same acres next year and normal demand we can cut another 300 m.b. or more, which means we will run out of beans before Sept. 1, 2009. since that can not happen, we then need to either go high enough before our next spring planting to find more acres or go high enough in price to cut usage by 75%. That is long term. Near term it is weather's impact on yields through our pod setting stage August 20th to maybe August 26th. We have 2 solid week's to make or break yields. Wrist.com sees next week as cooler with rain by mid-week and again late week. Come Monday, with a wet forecast we could test our 8.58 support and with good rains and coverage we could push to 8.42 on November futures. a hot and dry week will have us hit 9.02. Of course it is all about trading the next forecast.

Wheat

Thursday's weekly export sales report showed 890 t.m.t. of wheat was sold last week down 49% from the week prior and 38% under our four week average. Keep in mind the three prior weeks were the highest numbers in ten years, so the 890 is still very high but there will be those who will say this is the first red flag that wheat's price maybe hitting price levels that has some importers backing off. Friday's USDA crop report put all wheat production at 2.114 b.b. down 15 m.b. from pre-report estimates, down 24 m.b. from July and 302 m.b. under 2006. Ending stocks for wheat's new marketing year June 1, 2008 were put at 404 m.b. versus this past June 1 of 456. World ending stocks were put at 114.8 m.m.t. versus 116 in July and 124.9 on last year's ending stocks. No surprises here. World stocks are at 26 year lows. Competing export producers are having a poor growing year, leaving importers to turn to the US to fill needs as we are the primary port in the world near term to buy quality and quantity wheat. Like all demand driven markets, price rations commodity. Are we going a dollar higher before importers back away or are highs in. Nobody knows for sure, so our approach should be technical. Dec. longs can hold but exit and go short on a close under 6.70 next week.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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