Alaron Grains and Oilseeds Comment

CHICAGO - Oct 12/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Corn:

Our first report today was our weekly export sales report showing 2.319 m.m.t. of corn was sold last week our highest weekly sales number for 2007 with over 1 m.m.t. going to Asian markets where 70% of our exportable feed grains go annually. That is important as if the majority of sales were to non-traditional buyers it would be a one time big report and fall off next week. Our regular monthly importers were almost half the sales. it is a bullish demand signal. Our monthly USDA crop report out ahead of our open put corn production at 13.318 billion bushels 10 m.b. over our September report but 146 m.b. under pre-report estimates. Our ending stocks for September 1, 2008 the new grain marketing year were 1.997 b.b. up 322 m.b. from last month and 38 m.b. over pre-report estimates. There was a mixture of things leading to the numbers from less corn to ethanol and feed but higher exports. The bullish export sales report and a crop report not as bearish as anticipated led to a higher opening on short covering and unwinding of long bean short corn spreads put on in the days prior the report. The corn market kept its 9 cent trading range made in the first 15 minutes all day. Some technicians see the ending price settlement as near term chart bullish but it is a skewed number because it came from report release position evening up. Monday is critical. A higher close over 3.70 basis March sets us up for a test of 3.94 the top of a chart gap but if we start out lower and finish lower we will quickly test 3.44 next week. Near term were supply side bearish but long term spring contract bullish.

Beans:

The weekly export sales report showed 550 t.m.t. of beans were sold last week down 17% from the week prior but key buyer China was in for 218 t.m.t. it is a neutral near term demand indicator. The USDA crop report put production at 2.598 b.b. down 21 m.b. from the September report and 50 m.b. under pre-report trade guesses with our 2008 ending stocks unchanged from last month at 215 m.b. and 23 m.b. under pre-report estimates. Though bullish on the surface, it was not as bullish as rumors had it the two days prior and a 20 cent short covering rally. Beans traded up 5 to 10 to down 5 cents several times into midsession before closing down 3 on March. Long term next spring we remain very bullish beans but near term is mixed and we look to Monday for direction by funds as today reflects offsetting positioning from our report. March beans need a close over 10.20 next week to turn chart bullish with support down at 9.82 the bottom of a near term chart gap.

Wheat:

The weekly export sales report showed 934 t.m.t. of wheat was sold last week, 42% under the week prior and 44% under our four week average. Historically the 934 is a high number but the historic high prices hit 11 days ago have the trade thinking lower prices are needed to increase demand as the last three prior weekly sales were 1.6, 1.5 and 1.4 m.m.t. Overall demand remains robust but it is clearly softening. The USDA crop report put ending stocks for 2008 at 307 m.b. up 3 m.b. from pre-report guesses but 55 m.b. under our September report. These are the lowest ending stocks in 57 years. World stocks are at 31 year lows. Though bullish on the surface it was all expected and in line with pre-report positioning that saw a 40 cent short covering rally this week off Monday's low so, traders quickly sold the market to limit down 30 cents in early trade with Chicago down 25 cents. Unless march closes over 9.00 the trend remains down with next support at 8.35. A close under 8.35 basis March sets up a move to 7.75 to 8.00. A close over 9.00 negates the technical downtrend.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

www.alaron.com

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