Alaron Grains and Oilseeds Comment

CHICAGO - Dec 18/07 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

The week's demand reports began with Monday's weekly export inspection report showing 46.5 million bushels of corn was inspected for near term export.   This is up from 42.6 m.b. the week prior, 41 a year ago and slightly under our strong four week average of 48 m.b.   China announced they would eliminate an export tax rebate.   This makes it less desirable to export feed grains by taking away the incentive.   Other market news reporters saw this as price bearish.   Wrong.   Wheat China does not sell to the world or to surrounding Asian neighbors end up being new export business for the U.S.   Note:   70% of our exportable feed grains go to Asian markets.   The U.S. would love to fill the export hole left by China's slower export pace.   The only slow down in exports from a weekly perspective will come as China shuts down for their 2 week New Year's Holiday.   Near term we continue to look forward to higher prices into spring with the near term fear of the dreaded month end, year end pull back.   Stay focused on chart patterns.   March entered today, Tuesday, with resistance up at 4.42 and support at 4.30.   A close under support and a further correction to 4.18 is probable.   4.18 is our major support this week.

Monday's weekly export inspection report showed 35.5 m.b. of beans were inspected for near term export up from 34.6 the week prior, over our four week average of 27.7 and a year ago of 24.9.    More loading up by importers on U.S. beans as a drier outlook continues in Argentina and South East Brazil has allot hedge buying occurring.   WXRISK.COM sees the next chance for rain, if at all, is December 26th time frame.   Like corn, beans too are largely concerned about a month and year end correction.   The long term demand and acreage hunt for beans leaves us expecting 12.75 by March but a near term close under 11.65 basis March could set us up for more profit taking to 11.35.   Resistance is 11.80.

Monday's weekly export inspection report showed 19.4 m.b. of wheat was inspected for near term export down from 27.6 the week prior and four week average of 21 m.b.   On the surface it shows U.S. wheat demand is slowing.   It is expected after our recent price surge but it means demand went to other ports of foreign origin further reducing world ending stocks, currently at 30 year lows.   The world continues to eat breads, cereals and pasta as there is no other cheaper food substitute, such as the meats.   This keeps demand world wide good and our markets here responding to exports elsewhere.   Note:   When we were the sole port to find high quality wheat from last spring and summer our price surge drove foreign prices along for the ride.   Now were along for the ride until our winter wheat comes to harvest late next May and with good weather, hopefully, were the primary port to turn to again.   Near term we saw new contract highs Monday up the 30 cent limit before profit taking settled the C.B.T. March futures down 13.   Tuesday pushed to 19 down in early trade.   Everyone remembers how last year's winter high price December 26th gave way to a 70 cent break into January 10th.   March found minor support minor support at 9.65 today.   A close under 9.50 through Wednesday sets up a further break to 9.25 then potentially 8.90 if buying does not surface. If 9.50 survives new highs are certain.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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