Alaron Grains and Oilseeds Comment

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

Least looked at report of the day- Monday, was the weekly export inspection report showing 42.5 million bushels of corn was inspected for near term export, down from 46.1 the week prior but over a year ago of 35.2 m.b.   It is a good demand signal.   Corn demand looks to remain strong into fall as crude oil over a dollar a barrel keeps ethanol production progressing to keep up with the summer demand on consumption.   The USDA planted acreage report read like this:   Corn to be planted this spring at 86.014 million acres vs.. 93.600 the year prior or 7.586 m.a.  less.   Note:   we planted 14 m.a. more last year.   The number came in just off the lowest pre-report trade estimate.   The number was a little bit of a surprise to traders, but by Wednesday, the trade will remind us it is not what you plant but what you grow and get to paying more attention to weather and planting delays.   The key to this report is it makes weather much more important to the planting progress, early emergence and then key yield development time.   As our strong demand means even with a normal yield ending stocks will now come in under 1 b.b.   The lower the yield, the lower our ending stocks.   Wxrisk.com the weather site sees the lower Midwest and southern delta states as too wet for field work and early planting through April 13th as La-Nina continues to keep the heavy rains in those regions.   Planting in key northern Midwest regions of northern Illinois, Indiana, Ohio, Minnesota and Wisconsin will not begin until after April 21st.   The delay southern regions look to be a supportive factor lending thought that continued delays could lead to a switch from corn acres to beans which can be planted later.   December new crop corn has support at 5.80 Wednesday and 5.84 Thursday.   A close under first support would set up a test of 5.58 worse case scenario.

Monday's weekly export inspection report showed 23.8 m.b. of beans were inspected for near term export.   Off from 28.8 the week prior, but over a year ago of 20 m.b.   I would have hoped for a better number with the Argentine farm strike still on but the acreage report has many importers on the sidelines.   Near term bean demand looks good but not great as we continue to share exports with Brazil through early May.   For the year we should have record bean usage as world high protein needs outstrips production.   The planted acreage report showed 74.793 million acres will go to seed in late April and May vs.. 63.631 a year ago or 11.162 m.a. more.   Note:   Last year's crop was down 11 m.a. from the year prior so we are right back where we started.   This number was over the highest pre-report estimate of 74.239.   If weather is good through August 20th with normal yields, it means we will not run out of beans in 2009.   Of course it is not what you plant but what you grow.   Beans are largely planted in May, so the heavy lower Midwest and southern delta rains are not immediately important to beans as they are for corn.   The bullish side of the bean report is that the largest increases in planted acres come in the western corn belt of Iowa heading west.   This of course is the driest areas to date on the current La-Nina weather pattern.   The current pattern of weather into late summer would leave 37% of our bean production in jeopardy.   The long and short of all this is that the trade understand the acreage report is only the beginning of the second phase of our long term bull market and weather and its impact on emergence and key yield time will be 90% of our pricing influence.   The grey area is the period up to May 1st when bean planting begins all over.   Beans will remain influenced by outside markets and any further computer generated fund selling.   November new crop beans had support today at 10.40.   We had a 10.60 low before the shorts began to cover pushing us back over 11.00.   A close under 10.40 this week would set up a worse case scenario of 10.00.   11.60 is minor resistance.

Monday's weekly export inspection report 16.3 m.b. of wheat was inspected for near term export, off from 18.4 the week prior and 18.7 a year ago.   It is on the low end of our four and eight week average but it could be the late week break and release of the planted acreage report.   Demand remains good but not great.   With 60 year low ending stocks, most bins are empty so it is hard to find broad based export sales but rather more of a hand to mouth as needed sales.   the planted acreage report put all wheat varieties at 63.803 m.a. vs.. 60.433 the year prior.   All winter wheat varieties at 46.840 vs.. 44.987 last year.   Durum wheat at 2.630 m.a. vs.. 2.149 and the key spring wheat to go to seed in May at 14.333 m.a. vs.. 13.297 last year.   The wheat estimates were about as expected.   Like corn and beans, wheat too moves out of the planted acreage psychology to the growing season psychology.   Though our spring wheat crop will   not go to seed until May our winter crop is breaking dormancy in the western plains.   Next Monday at 3:00p Central Time the USDA will release weekly its wheat crop condition reports.   Weather and its effect on crops will either raise or lower quality ratings with prices following.   Weather will be the key driving force.   We should use this week to identify a low for K.C. and C.B.T. wheat to be a buyer.   K.C. Exchange July futures have support at 9.10 and 8.50 worse case.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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