Alaron Grains and Oilseeds Comment

CHICAGO - Apr 4/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 704 t.m.t. of corn was sold last week, up 11% from the week prior.   this is 1% over a healthy four week average.   Asian sales were a little weak as they backed off ahead of this week's planted acreage report.   Demand remains strong.   The smoke has cleared from the long awaited March 31st planted acreage report and all eyes are on weather and its impact on planting.   Early emergence and finally the key growing season.   The projected 86.014 million acres to be planted is 7.5 m.a. below last year.   The leaves little room for error in the growing season.   Consider this:   If we plant 86 m.a. with last year's 151 bushels per acre yield, our current 2008 ending stocks of 1.4 billion bushels will drop below 300 m.b. with our current demand pace.   Needless to say, we need perfect weather across the entire grain belt in hopes of 154 or 156 b.p.a. to insure ending stocks; hover closer to the 800 m.b. to 1 b.b. ending stocks number for 2009.   This looks to be a tough task with our current La-Nina weather pattern that currently has the western grain belt too dry with June to August forecasts for drier conditions across the Midwest.   The National Weather Service currently has 47% of the U.S. suffering from moisture deficits.   Most of those areas are Iowa (west and south) to Texas.   Southern Illinois, Indiana, all of Ohio and our southern delta states are receiving too much rain.   Wrist.com the weather site sees near record rains the last two days with more on April 11 and 12 and potentially a larger rain event on 14 and 15.   If this forecast hold true, we will have no field work or planting before April 18th.   I am sure those who intend to plant will- but we could end up having 75% of our corn planted in the last 25% of the preferred panting window.   This is leaving it to hit key yield time, when a third of its total growing cycle moisture is needed for good yields in July.   This is when conditions are generally too hot and dry rather than June when conclusion, more rain Tuesday then Thursday and Friday with a big rain system being looked at for April 14th & 15th.   An always friendly USDA crop report Wednesday, sets us up for higher prices next week.   December new crop finds first support at 5.92 Monday then 5.62.

Thursday's weekly export sales report showed 184 t.m.t. of beans were sold last week of 50% from the week prior.   We expected a pull back ahead of the March 31st planted but not this much.   There was a little twist to the report.   Key player, China, was in for a total 240 t.m.t. split between old crop delivery before September 1st.   New crop delivery after September 1st, China is buying near term and far term as farm and shipping problems keep surfacing out of South America with the Argentine farm strike and talk of a Brazilian dock strike.   The Argentine farm strike is temporarily on hold while a dock strike in Brazil is always short as those jobs are among the highest in pay.   Demand overall is bullish long term and choppy near term through the end of May, when Brazil's shipping winds down.   Now that the acreage report is behind   us and everyone wonders wheat do do, here is some thoughts:   Wrist.com sees June through August in the Midwest, Nebraska to Ohio as drier and warmer than normal on an extension of the La-Nina weather event that currently has Illinois east to Ohio excessively wet.   The biggest acreage increases come in Iowa and Nebraska at 1.2 m.a. more each and they are currently missing 90% of the spring rains.   Since the 11 m.a. increase are the acres we gave away to corn last year and 1% less than 2006; what have we really gained?   Not much unless weather is perfect and yields are high.   If weather is perfect from June 15th to August 20th, and we have our average five year yield, ending stocks could climb from 140 m.b. this year to 350 m.b. in 2009.   That is 200 m.b. under the ending stocks in 2007.   With demand for high protein vegetable oil crops rising assuring record U.S. and world usage, any short fall in yields and the 11 m.a. advantage could be lost.   Consider buying the November 11.80 call and sell the November 13.00 call for 45 cents or about 2,200 dollars.   You have 1.40 profit potential or 7,000 dollars or better and you control downside risk if weather is perfect and or index begin another long liquidating of their 200 thousand plus positions.   Next week's rains look to keep early field work and planting at a standstill and with a friendly outlook for Wednesday's USDA crop report we should start off firmer November new crop has support 11.60.

Thursday's weekly export sales report showed 267 t.m.t. of wheat was sold last week off 30% from the week prior and about in line with expectations ahead of planted acreage report.   any number is good demand when you are at 60 year low ending stocks but most demand awaits new crop harvest late May through June.   The planted acreage report Monday, showed a 1.3 m.a. increase in spring wheat acres to be planted this May and all winter wheat varieties up 1.8 m.a.   These are small increases considering we have current inventories at 60 year lows and world stocks at 40 year lows.   With perfect weather world wide, ending stocks will increase.   However, with bins empty here, for every two bushels harvested one will go to near term needs and the second to storage for the next growing season.    The problem  is to not get caught short wheat stocks again and forced to enter a ridicules cash market pricing putting us back in a cash market to bid up to get wheat locked up for that rainy day.   We are starting to break dormancy on our winter crop in the far Southwest and soon north into Kansas.   The current crop ratings are 44% in good to excellent condition vs.. 77% a year ago in number one wheat producing state Kansas.   Texas is 46% G-E vs.. 89 a year ago and Oklahoma a weak 49% G-E.   these are state government sponsored ratings.   the USDA begins its weekly 3:00p Central Time crop condition ratings this Monday.   The report will give each states condition in these categories:   Very poor, poor, fair, good and excellent.   the trade adds up the numbers in the good and excellent category and uses that total to rate the crop as it is the good to excellent wheat that meets milling and export standards with the very poor and poor total more suitable for feed rations to animals.   These Monday reports become critical to the trades pricing as to weather they buy or sell.   We can not predict with certainty what the weather will be but any weather problem with empty bins and a considerable rally is imminent.   Consider buying the Kansas City Exchange July 9.80 call, sell the 10.80 call for 35 cents or about 1,700 dollars.   You have 5,000 profit potential and with the 60 cent limit daily risk in futures, it is a safe play.   You do not want to sell puts to pull in premium to cover cost as downside risk is too great.   Reason:   Index funds are holding twice as many long futures bushels than we produce.   If weather great and or outside markets collapse leaving funds to sell commodity positions in grains we could sell off sharply.   Seasonal traders not afraid of risk can start selling July C.B.T. Futures and buying K.C. July Futures as a seasonal play.   Just a reminder if you do not have a full service account at Alaron and would like to use me as your broker, please call:   800-563-9510 or e-mail me at thannagan@alaron.com.   No account minimum.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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