Alaron Grains and Oilseeds Comment

CHICAGO - Jan 18/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 2.369 m.m.t. of corn was sold last week, up from 670 t.m.t. the week prior, a new marketing year high since the marketing year began September 1. over our four week average of 990 t.m.t.   Asia was in for 1.6 m.m.t. vs.. our holiday shortened export weeks of 350 t.m.t. and 400 t.m.t. the two prior weeks.   No surprise here, as I noted on my Tuesday report that we should expect a big number today as the USDA daily reports last week shoed strong Asian business- probably catch up from the slower holiday trade.   So what happened this week:   Monday saw a continuation of the bullish mindset from Friday's USDA monthly crop report, showing us a lower ending stocks number for 2008 as we continue to consume more corn than we can produce.   The first 90 days of the new year, just like last year, are to find a price high enough to maintain interest in farmer to plant equal or more acres than 2007.   This is not going to be easy, as soy beans and spring wheat futures on the Minneapolis Exchange continue to seek their price to insure wheat and bean acres are sufficient enough to keep us from running out their shrinking stock.   Tuesday started with new contract highs before settling lower.   On my Tuesday report, I said look for a move into the gap left from Friday's high and Monday's low with the bottom of the gap for March at 4.96 at which point we should buy.   Wednesday brought us a low of 4.967 with a 5.01 close.   Thursday saw a 8 to 10 cent higher opening range off the bullish export sales report.   Friday saw two sided trade.   the history to date on three day holiday closing is buyers return after the holiday pushing us higher but there is talk of an eventual bigger correction is in store.   Last year corn rallied from a January low of 3.70 basis July futures to 4.60 on February 26th to insure we planted enough acres not to run out of corn in 2008.   It worked, we planted 14 m.a. more than 2006 and fund selling in March and April dropped July to a 3.58 low April 2 before funds repositioned long for our summer growing season rally.   With corn and beans further ahead on its rally to buy acres many think we could lock up the acres needed and correct back in January.   Just be ready and mange your account.   Near term march corn has support at 4.90 on Tuesday, when we return.   A close under here and 4.75 is next stop.   May support is 5.00 with new crop December at 5.10.   closes under first support would confirm the bigger correction.   On the other hand if we come in Tuesday with pent up fund buying.   New contract highs are certain.  

If you do not have a full service account at Alaron and would like to use me as your broker call:   800-563-9510 or e-mail thannagan@alaron.com.

Don't forget to go to Alaron.com and get my 2008 grain report released this week!

Thursday's weekly export sales report showed 965 t.m.t. of beans were sold last week up from a marketing year low of 188 the week prior.   This is two times over our four week average.   The better numbers came as China came in for 263 t.mt. after being a soy oil buyer the two prior weeks and passing on the bean itself.   Near term, South America looks to capture more world exports into late March but long term U.S. demand remains strong.   The week brought historic highs Monday after Friday's USDA crop report reminded the trade were still consuming beans at a rate higher than we have been producing.   Profit taking brought March down to 12.52, just 2 cents from the chart support, which I gave on Tuesday's report.   After the Wednesday low, Thursday's export sales numbers pushed us 35 cents higher before more profit taking came in pulling us down on the day into midsession.   The ranges of the rallies and breaks were so big you could buy and sell for profits twice a day.   Friday saw two sided trade with midsession lean to 12 lower.   The question is 'Did Monday's high of 13.50 basis March convince the growers to plant the 6 to 8 m.a. more beans?   We need to insure we insure we do not run out of beans in 2009.   We do expect farmer decisions to be made earlier than the late February highs it took last year.   reasons are tow fold:   1.   Prices are far ahead of a year ago.   2.   Seed salesmen are telling growers in now that they better buy that preferred bio-genetic seed now or they may not be able to get it later as supplies run out.   A salesman may also say regarding fertilizer to buy now or tight supplies of some chemicals will run short as well.   the big question is do large index funds sense the acres are bought, and are they ready to off set acreage buying profits with intent to buy new crop growing season contracts?   Next week could confirm it.   March bean Tuesday have key support at 12.50.   A close under sets up a test of potentially 11.80.   New crop November support is 12.50 today.   A close under sets up 12.00.  

Thursday's weekly export sales report showed 404 t.m.t. of wheat was sold last week up from 190 the week prior and 99% over a weak for week average.   The better sales came as Asian customers played catch up after our recent holiday closings.   I would like the better numbers to have come from larger world players.   The week for wheat was similar to corn and beans.   After a bullish crop report last Friday, we rallied from Friday's low of 8.90 to 9.45 Tuesday.   The profit taking Wednesday down to 9.05 and a bullish export sales report Thursday took us up the 30 cent limit early to 9.56 before more profit taking on the March C.B.T. contract.   Friday's actions was two sided but generally weak in Chicago.   What funds continue to do is buy K.C. Exchange hard red winter wheat futures and sell C.B.T. soft red wheat futures and buy Minneapolis spring wheat futures.   Sell the C.B.T. as spreads.   Traders like the K.C. futures on concern over weather near term to exposed dormant wheat and concerns long term on wheat the March through May growing season weather May bring.   Minneapolis strength comes on fear that its price needs to be high enough to insure that beans do not steal away too many acres as they go to seed at the same time.   Wheat overall had the best strength today as no one wanted to be short going into the week end as Pakistan is offering to buy 610 t.m.t. from the lowest bidder.   Egypt's purchase Thursday of 490 t.mt. from the U.S. and Russia suggests they feel were fair value.   Stick to the charts.   march C.B.T. wheat has support at 9.20 then 9.00 with 9.60 resistance.   A close over 9.60 and new contract highs are next.   March K.C. futures find support at 9.60 then 9.30 with resistance at 10.05.   Minneapolis March futures have support at 11.25 then 10.75.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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