Alaron Grains and Oilseeds Comment

CHICAGO - Feb 12/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Monday's 10:00a central time weekly export inspection report showed 40.6 million bushels of corn was inspected by the USDA at the request of exporters for near term shipment.   This was down from 51.9 the week prior, under our four week average of 52 but over a year ago of 36 m.b.   Year to date inspections are 1.120 billion bushels vs.. 948 million bushels a year ago.   Though down on the week it is a good demand number as Asian markets are closed for business on the Lunar Holiday.   Last week we saw funds taking profit off several strong rallies, near limit up on tow separate days only to end up lower.   This week has seen light outright selling of longs as we are caught in an area of time when there is no important supply demand news.   This is why I said on Friday's report, watch out for a February break.   Last year the correction began February 25th, but this year we are further ahead on price gains trying to secure acres.   February seems to be the month of profit taking for funds as they know that March is a  month to be long again ahead of the USDA monthly crop report march 11th.   It is also potentially the biggest report in Agriculture history the march 31st planted acreage report.   Funds will look for a February low for a spring board for a March rally.   May has support at 5.05, 4.92 then 4.80.   New crop December has support at 5.10 then 5.00.   I am looking for lows to buy new crop futures.  

Monday's weekly export inspection report showed 37.8 m.b. of beans were inspected for near term export, up from 29.8.   The week prior and 27 a year ago.   It is a decent demand signal considering the closing of Asian businesses.   The bean scenario is identical to corn.   Last week profit taking on rallies and this week selling on a dead period in the supply demand reports, until the potentially bullish March 11th crop report; and the March 31st planted acreage report.   Demand is a little stronger this February period than it should be but the high protein vegetable oil inventories to demand usage looks terribly bullish for early year.   May beans find support at 13.20 then 12.90.   November new crop support lies at 12.30.   Anything near 12.30 area I will be a buyer and look for strength into the fear of the March 31st acreage report.   Those who tuned into my website grain review February 5th are welcome to listen in on a briefing on grains and trading strategies.   On Wednesday, February 13th at 2:00p, you can log on at Alaron.acrobat.com/thannagan.   The report will be about 20 minutes long.

Monday's inspection report showed 17.7 m.b. of wheat was inspected for near term export vs.. 16.9 the week prior; our four week average of 20 and a year ago 13.5 m.b.   It is a neutral to slightly friendly demand number at best.   Monday saw all three wheat exchanges raise the daily trading limits from 30 to 60 cents with large increases in the daily margins required to hold each position with intensions of breaking the lock limit up trading occurring.   It worked.   Monday saw the CBT and K.C. Exchanges up the 60 cent early before closing sharply lower with a higher trade early today and another sharp break.   It was those traders who had been buying CBT and K.C. wheat in the up draft of limit up openings in the Minneapolis spring wheat futures.   They were the big profit takers this week on the thinking Minneapolis would finally trade after 9 up limit days.   The March did come off limit briefly before locking up 60 on the close but May through December Minneapolis futures were down limit 60 cents.   The markets are ignoring the March Minneapolis futures now as it does not reflect the trading fundamentals of the wheat market.   Instead it becomes the classic squeeze play, were the longs in the market do not want the profit.   Won't the wheat and will force the shorts, who has obligation to deliver against or to long futures?   To go out and find it and deliver it at any cost in an environment were ending stocks are at 60 year lows.

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.