Alaron Grains and Oilseeds Comment

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

Wednesday's USDA monthly crop report put ending stocks came the start of our new marketing year September 1st, at 1.238 billion bushels vs.. 1.438; the month prior and under the average pre-report guess of 1.303 b.b.   The USDA raised exports and feed usage to lower inventory.   Currently we will consume more corn than we will produce this year based on the March 31st acres report showing 86 m.a. going to seed this spring.   This will not work, so something will change.   One, growers will find higher prices and plant more corn.   Remember- many growers are undecided on planting and will make their decision before May 10th.   Two, prices will move high enough long term to discourage over consumption and curtail exports, feed and ethanol usage.   Either way, corn remains bullish into the growing season as it does not matter what you plant but what weather allows you to grow and that fear remains until pollination is over.   Thursday's weekly export sales report showed 473 t.m.t. of corn was sold last week down 32% from the week prior but key Asian sales were 400 t.m.t. vs.. 151 the week prior.   Sales need to push back over 1 m.m.t. weekly or some may suggest were slowing on demand.   What is up for next week?   Wxrisk.com the weather site sees generally warm and dry conditions from Monday to Saturday.   After massive rains this week, we will not look for any field work to surface in the Southern Delta until Wednesday through Saturday.   When we come in Monday and this forecast holds we should see corn open and close lower and possibly a lower opening Tuesday.   We need to look to buy the Monday or preferably Tuesday low and get long again as forecasts for the following week of Sunday April 20th through 28th. It looks to turn cooler and wetter again leaving corn and bean field work at a standstill again.   Note: though we are looking far ahead we need to update weather and its effect on grains daily as one twist on the jet stream and forecasts turn the opposite way.   Updating option opportunities for our long term growing season I like buying 1 December 6.20 call and sell 1 September 7.30 call for 40 cents or better.   Cost is 2000 plus commissions with profit potential of 5500 or better.   Ideally, we want a market like last year were the September calls expire late august and corn rallies into September while we still have the December call.   If you have not yet singed up for a weather service, now is the time.   You can not trade without the advanced warning of weather changes and advantage the report gives.   I highly recommend wxrisk.com at 571-223-0513.   Their grasp of the European model of weather forecasting has them ahead of the other forecast groups I follow.   I am sure you can subscribe for the summer program.

Wednesday's the USDA puts ending stocks this September 1st and the beginning of our new harvest at 160 million bushels up 20 m.b. from the month prior and 3 m.b. over the average pre-report trade guess.   On the surface it looks negative because numbers were up, but remember 160 m.b. is a bullish number.   On the February 8th USDA report they lowered ending stocks down to 160 m.b. and May beans rallied from 13.15 to current contract highs of 15.39.   Old school thinking is that current wet weather means delayed corn planting could lead to more bean planting.   New school index fund thinking says beans need to exceed corn's strength so corn does not steal our badly needed bean acres away.   We are still in a battle for those undecided acres as some farmers sit on the fence and wait for the heavy rains to end allowing planting to begin and this may not be soon.   When the planting window opens, corn and beans will see a pull back temporarily.   Thursday's weekly export sales report showed 583 t.m.t. of beans were sold last week, 87% over our four week average with key world player China in for 286 t.m.t. vs.. 240 the week prior.   Brazil's ports are moving grain at their usual slow pace, while Argentina sees little movement.   A temporary halt to the farm strike has not helped much, but this is a market like corn that is moving from demand fundamentals to new growing and planting weather pricing.   Next week's warmer and drier weather looks to have beans start off lower but the wetter forecast the week after sets us up to look to buy an early week low with prices firming into week's end.   Of course that depends on weather forecasts currently holding true.   Long term growing season bulls can still look at the call spreads as low risk trades.   You can still buy call spreads with opportunity such as buying 1 November 12.80 call and sell 1 September 14.00 call for 35 cents or about 1750 with 6000 plus profit potential.   The plus occurs when the September expires in august and the bean keep their rally into and through September like last year leaving you still long the November call.

Wednesday's USDA crop report put ending stocks or as some say carryover stocks for the start of wheat's new marketing year June 1st, at 242 m.b.   Unchanged from the month prior and under the average pre-report trade guess of 261.   It is a historically low number, but it is all about weather and its impact on emerging winter wheat crop. This  states as the current low ending stocks can change for next year depending on this year's growing season into late May.   Thursday's weekly export sales report showed 454 t.m.t. of wheat was sold last week up 70% from the week prior and an additional 309 t.m.t. sold for new crop delivery after June 1st.   Good sales but we are more concerned with weather and its impact on emerging winter wheat crops.   This week's rains helped the key winter wheat states of Texas, Oklahoma, Colorado and Kansas.   Next week looks almost hot and drier which should help the greening up phase and all this is bearish from a new crop weather view point.   I have been hoping for a move on K.C. July new crop futures down to 9.10 at which point, technically I can buy but wrist.com sees western grain belt rain on April 20 to 28 again and this would be bearish as well.   It still apppears lower bids are coming and I will hold off buying until weather reports change to a problem.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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