Alaron Grains and Oilseeds Comment

CHICAGO - Dec 14/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 1.155 m.m.t. of corn was sold last week up 9% from the week prior and 24% under our strong four week average.   Asian sales were 340 t.m.t. vs.. 300 the week prior.   Asian sales are critical to maintaining our strong export market as 70% of our exportable feed grains go to Asia annually.   Nothing has changed in the basic fundamental trend for corn.   It continues to trail beans in their quest to buy back some of the 11 m.a. they lost to corn planting this year.   This leaves corn not wanting to lose too much of the 14 m.a. they gained.   Demand overall remains robust with Asian markets buying heavy before Asian and U.S. holiday closings set in.   This week simply added more fuel to the bull market rally.   Tuesday showed further declines in ending stocks on our USDA crop report and even with higher prices last week our export sales increased.   though much higher prices are in store in 2008, traders need to be watching for any month or year end profit taking.   Last year March corn rallied from 3.60 December 18th to 3.94 on the last trading day of December as the first two weeks of December saw a sizeable break and profits taken on the month.   When we returned from the New Year's Holiday the futures gapped lower and doper 40 cents into January 10th before beginning it next rally.   This came as farmers holding back grain sales until after January 1 to divert tax liabilities, began to sell heavily.   This certainly will be in the minds of traders again this year.   Any month end or year end or just profit taking in general of any sizeable amount is only an opportunity to get positioned for long term spring contracts but small under margined traders need to be aware of the near term risks the next 1 to 3 weeks.   March corn sees resistance at 4.42 and support at 4.28.   A close 4.28 sets up a drop to 4.16.

Thursday's weekly export sales report showed 971 t.m.t. of beans were sold last week up 21% from the week prior and 23% under our strong four week average.   China was in for 240 t.m.t. vs.. the two prior weeks of 351 and 561 t.m.t. were seeing China slowing up on purchases which is not good but if dryness continues in south America they could suddenly pick up hedge purchases.   Especially ahead of their Chinese New Year two week holiday.   Beans saw a week full of bullish news to continue its bull market.   Tuesday's USDA crop report lowered ending stocks for next year.   Thursday's export sales shoed an increase in demand even on high price gains and dryness continues over the drier than normal bean fields in Argentina and south East Brazil.   WXRISK.COM sees the next 10 days as very hot and dry before a chance for some rain by Christmas.   Like corn, beans too look to see much higher prices into spring but small low risk traders need to be aware of a near term correction.   Last year saw March beans make an early December break of 60 cents from November 26th to a December 18th low of 6.60 then rally into the last trading day of December to 6.98.   the following week saw heavy cash new year bean sales by farmers pushing beans back to 6.60 on January 10th before continuing it bull trend.   profit taking is always there when longs get too fat with profits but it comes quickly and does not last long in a true bull market so any correction weather 10 cents or 80 would be a great time to reposition long into spring contracts.   March beans had resistance of 11.70 this week trading through Thursday and Friday.   A close over 11.70 sends a bullish chart signal to chartists to add longs.   Support is 11.50 Monday.   A close under 11.50 and 11.25 is next stop then major resistance at 11.10.

Thursday's weekly export sales report showed 513 t.m.t. of wheat was sold last week up from 230 the week prior and 33% over our weak four week average.   the advantage came as Asia was in for 380 t.m.t.   This was surprise.   Demand numbers are not great but domestic and world stocks being at 30 year lows make any sales or exports important as it further deletes bare shelves.   As I noted on my last two reports that wheat's move from our November low of 7.63 to 9.00 was largely short covering or profit taking from the previous 2.00 break but I noted the move beyond 9.00 to the 9.50 area basis March futures in the C.B.T. contract was new long positions entering as concern over the possibility of spring wheat acres being lost come spring plantings to beans.   With ending stocks of wheat at 3 decade lows, we can not afford to lose acres of wheat and this has pushed the spring wheat futures delivered on the Minneapolis Wheat Exchange to over 10.50.   Minneapolis wheat is the leader now but this trader's buying heavily in K.C. Futures as well as Chicago Board of Trade's contracts.   We have to factor soy bean and corn movement into wheat's daily reasoning now.   Like corn and beans, wheat traders too need to watch the witchery that can occur in late December or early January.   Last year March Futures broke from a November high of 5.40 to a December 13th low of 4.80; then rallied to a December 27th high of 5.20.   This started a 70 cent break that ended January 11th before rebounding.   This week had 9.60 on our March contract as major resistance.   We pushed through it Thursday and closed under and through again on Friday.   the key is a close above 9.60 tells chart traders to add to longs the next trading day.   support lies at 9.30 Monday.   A close under here and 8.90 is next stop.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.