Alaron Grains and Oilseeds Comment

CHICAGO - Mar 11/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Monday's weekly export inspection report showed 44.7 million bushels of corn was inspected for near term export vs.. 47 the week prior and four week average of 46 m.b.   It is a good demand number but not bullish enough to over shadow our Tuesday USDA report influence.   On my Friday report I said expect a lower open Monday on follow through from Friday's down limit trade.   Expect short covering as the shorts have all the risk ahead of the Tuesday crop report as 6 of the last 7 reports showed lower ending stocks.   We got it.   After a 20 cent lower opening we saw short covering to up 20 cents at midsession.   The crop report Tuesday showed our carry over or ending stocks come the start of our new grain marketing year and harvest September 1 at 1.438 billion bushels unchanged for the second consecutive month.   They put world ending stocks at 110.4 up from 109.7 the month prior.   Traders had expected a slight cut as exports have been running far ahead of a year ago but the USDA decided to wait.   At some point unless demand falls off sharply the USDA will have to raise export projections.   The next report is the March 31st planted acreage report and possibly the most awaited report in Ag history.   Unless funds continue to take profits we look for this week to signal a near term March correction low to build longs into March 31st before a bigger dip in April occurs, then our rally into summer.   Going into today we had first support for May at 5.54.   A close below here and 5.40 is next major support.   December new crop futures find minor support at 5.68 then 5.58 with our major support line at 5.34.

Monday's weekly export inspection report showed 29.8 m.b. were inspected for near term export, off from 32 the week prior.   This is just under our four week average of 31 m.b.   It is a neutral to friendly report on near term demand.   Like corn, beans too saw the lower open I called for on Monday then buying to begin as traders fear another cut in ending stocks on Tuesday's crop report.   we were down the 50 cent limit after the opened and by mission we were up a few cents before pulling back again.   The crop report today was more bullish than expected.   They put ending stocks come September 1 at 140 million bushels down from 170 the month prior.   They raised export projections 20 m.b. as china's active buying without any seasonal cancellations leaves no question.   Prices are not rationing the crop.   This gives the long term bull market even more fuel as a hotter and drier than normal growing season particularly between July 20th and August 20th could wipe out the 140 m.b.   Next stop the long awaited March 31st planting report.   Will it show enough acres to be planted to insure we do not run out of beans or not.   May beans have minor support at 13.75 and major support at 13.30.   New crop November finds support at 12.60 and major support at 12.30 this week.

Monday's weekly export inspection report showed 18 m.b. of wheat was inspected for near term export up from 16.2 the week prior and our four week average of 17.5.   In a year of normal or ample supplies it is a bearish number but 60 year lfow ending stocks makes it at least a friendly near term demand indicator.   Wheat followed corn and beans flower on the open with July K.C. hitting 11.01 and turning up to 11.61 at mission and July C.B.T. at 10.44 on the open with a short covering rally to 11.13.   You are seeing the Kansas city hard red winter wheat futures and the Chicago Board of Trade soft red winter futures prices coming in line with each other even though they are different crop verities and growing seasons.   Reason:   The K.C. is the next big crop to grow and dormancy breaks this month.   The volume of trade on the small K.C. Exchange does not meet the large index fund needs so index funds use the bigger C.B.T. Exchange to trade their K.C. trading psychology.   In other words they see those two exchanges as one in the same.   Tuesday's crop report put ending stocks for the start of wheat's new marketing year June 1st, at 242 m.b.   Down 30 m.b. from last month's report.   This was much greater than the trade had expected.   This largely came from an increase in exports as importers are nervous that another poor growing season in the world could cut our 60 year low ending stocks even further.   So let's build some inventory no matter how small.   This put C.B.T. and K.C. Exchange futures up 60 cents limit after the opening.   May C.B.T. wheat has support at 11.60 then 11.25.   Kansas City new crop July support lies at the same as May C.B.T. prices.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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