Alaron Grains and Oilseeds Comment

CHICAGO - Mar 7/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 648 t.m.t. of corn was sold last week, up 8% from the week prior.   This is 30% under our four week average.   That is the second week in a row of poor export numbers as 1 m.m.t. or more is needed to maintain a bullish near term stance.   Though the sales were soft on appearance you have to consider this:   One:   Weekly export sales are generally lower ahead of monthly USDA crop reports as foreign importers await fresh domestic and world supply demand indicators for marketing purposes.   Two:   Asian sales were 440 t.m.t. vs.. the week prior of 256.   With 70% of our exportable feed grains going to Asia, it is those sales that determine the strength of demand.   Corn saw new contract highs Monday and Wednesday, while beans were on a wild ride as corn did not see unwinding of spreads as traders are not long corn and short another crop.   We did see some unwinding of the long May, short December spreads then some profit taking on Friday down to minor support on may.   Our first December support at 5.60.   Next support for May if we trade lower Monday is 5.38 and December 5.52.   with our USDA crop report due for release Tuesday, at 7:30a Central Time; we should expect a bounce off lows as it is the shorts that have the risk of seeing lower ending stocks.   We are 1.438 billion bushels unchanged from the month prior but under December of 1.797 b.b.   November of 1.897 and October's report of 1.997 b.b.   If lower ending stocks are going to occur it will come on a higher export projection.   A higher close Monday is not unreasonable it is Monday's open that is in question.   Aggressive traders can buy a lower open Monday.

Thursday's weekly export sales report showed 202 t.m.t. of beans were sold last week off 65% from the week prior and 69% under our four week average.   China was absent from the list, after purchases the two prior weeks of 248 t.m.t.   Not a good near term demand signal.   Reason:   Brazil's crop is coming to market and China is loading up on their crop over ours but the key is we are not seeing cancellations of previous U.S. purchases because Brazil is cheaper.   China is keeping all they contracted for-   Additionally, China will be back buying U.S. heavy again when South America's done delivery.   China's Ag officials have stated this week they plan to build government reserves of beans and bean oil, additionally to meeting near term needs.   This will keep not just our demand but world high protein crops in high demand through our fall harvest.   After making new contract highs on all contracts to start the week we saw profit taking pull beans down while corn and wheat stayed strong.   Reason, large trading funds decided to unwind their profitable spreads.   They took their long soy oil, short soy meal spreads off.   they took their long bean short CBT and KC wheat shorts off, and we saw unwinding of the long May short November spread they build since last fall.   Remember, March is the last month of old crop up front futures trying to reach a high enough price to buy acres for the March 31st planted acreage report.    The new crop November futures being the lead dog as all the risk will be in new crop fates during the planting and growing season.   March contracts in deliver have no limits and at mission we are trading under May on out contracts that we are limit down.   This suggests that if we close with the March contracts much lower than the differed contracts we could see a lower open Monday; but being that it is Friday the weekend could see remaining unfilled sell orders dry up and get cancelled.   This giving us a better open.   Shorts hold cover Monday, especially off a lower open ahead Tuesday's crop report on fear of a lower ending stocks number.   Here is how the prior months read:   February 160 million bushels.   January 175, December 185, November 210, and October 215 m.b.   This has been a big profit taking week for funds in soy oil, meal, beans sugar, coffee, cocoa and orange just.   This is all part of what I have been talking about for about a month and that being there is to legs to our bull market.   The first is the rally into March to buy acres for all the feed grains then profit taking and repositioning in new crop contracts for the spring through summer growing season when risk over production settles in.   Our biggest rallies yet may occur if weather turns foul.   November support today was 13.10 then 12.60.

Thursday's weekly export sales report showed 431 t.m.t. of wheat was sold last week up 40% from the week prior.   The problem was 400 t.m.t. went to Iraq and that was already known and priced in last week.   Had they not bought we would have had no exports.   Wheat had a good week thanks to spread unwinding.   May CBT held support at 10.90 but a close under here and 10.25 is next stop.   Keep watching the new crop July Kansas City Exchange winter wheat futures.   with wxrisk.com the weather site calling for potential rain in the western wheat belt states.   We could yet see our goal of seeing July down to the dream price of 9.75 to 10.00.   We are currently at just over 11.00.   Wxrisk.com sees this potential wheat state rain late next week.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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