Alaron Grains and Oilseeds Comment

CHICAGO - Feb 1/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 1.9 m.m.t. of corn was sold last week up 18% from the week prior and 43% over a strong four week average.   As expected, Asia was the key player in for 1 m.m.t.   The long and short of Asian communities appetite comes as China an exporter to surrounding Asian neighbors- is keeping corn and beans home for needs of expanding hog, chicken and ethanol expansion.   This leaves the U.S. to fill the hole in exports.   This will be a common theme through 2008.   The horrific winter snowstorm pattern across China the last month and destruction of winter crops is yet to be determined but there is potential China may have to enter as a near term importer.   It can only be bullish from an U.S. demand view point.   After some follow through profit taking on Thursday's opening and unwinding of bull spreads, traders moved in buying the bullish 2008 theme of demand will outstrip supply again.   Feed grains will continue higher until we fully price our grain into the wildly inflationary world market.   Expect new contract highs with another correction after February 15th, that should be very minor then strong gains into the March 31st planting intension report.   March has minor support at 5.00 major at 4.80.

Thursday's weekly export sales report showed 488 t.m.t. of beans were sold last week down 26% from the week prior but 3% over a friendly four week average.   China was in for 149 t.m.t. vs.. 204 the week prior.   The key to this report is that even though our exports are slowing as Brazil over takes us near term as the world's primary port for new crop beans.   China has not cancelled any previous U.S. buys and switch over to Brazil as they normally do this time of year.   The continued U.S. buying of beans by China and no cancellation remain a bullish demand indicator.   March beans continue to throw up higher bids to match the soaring Minneapolis spring wheat futures.   March Minneapolis pushed through $14. today on fear that lower prices could mean a loss of acres to beans come our May planting.   Beans look to continue its strength before the release of the March 31st planted acreage report with Minneapolis.   Keep a healthy premium to beans.   Stay long November unless a close under 12.00 occurs.   March has minor support at 12.75 Monday with major support at 12.00.   Add to long if 13.10 broken.   Bean psychology is it is not going to get enough acres from corn but from spring wheat and oats.   This leaves beans upside unlimited into March 31st as U.S. ending wheat stocks are at 30 year lows and spring wheat futures desperate not to lose acres.

Thursday's weekly   export sales report showed 508 t.m.t. of wheat was sold last month up 20% from the week prior and 79% over a weak four week average.   Asia was in for 190 t.m.t., but nothing from key world players Egypt and India.   It is a neutral report on demand.   It is all about the Minneapolis spring wheat futures and 30 year low ending stocks, keeping futures on its historic rally in hopes not to lose acres to beans this May planting season.   March Minneapolis futures are about $1.  over March beans while the new crop September Minneapolis wheat is at 1 $2.75 discount to new crop November beans.   We have to assume that September Minneapolis will narrow the spread to November beans.   The big thing to watch for in February is at wheat point will the trade, pre-occupied with Minneapolis spring wheat futures, re-focus on the Kansas City winter wheat futures, that now lie dormant.   Winter wheat breaks dormancy in March.   Depending on weather, it could be early March or later.   The crop went dormant with a crop condition rating of 44% in good to excellent condition.   It is lowest rating on last year's crop was 47% G-E and highest 71%.   So it went dormant in fairly poor condition and will be challenged to find near perfect weather when dormancy breaks.   Index funds could jump into heavy Kansas City buying in February before dormancy breaks.   As there is much talk from the weather gurus that la-Nina will bring warmer and drier than normal early spring weather.   Currently, key winter wheat states Texas, Oklahoma and Kansas are very dry for the winter.   With U.S. and world stocks at historic lows, our winter crop is our next chance to build inventory.   For near term traders, March C.B.T. futures have support at 9.30 and minor resistance at 9.70.   Do not sell resistance but add to long on a close over.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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