Alaron Grains and Oilseeds Comment

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

We started the week's reports with Monday's weekly export inspection report showing 30.7 million bushels of corn was inspected for near term export, down from 35.8 the week prior.   34 m.b. a year ago and our four week average of 41 m.b.   It is the fourth consecutive weekly decline.   Two issues for a softening demand recently.   One, we have been pushing to new contract high prices 3 of our last 4 weeks and two, much talk of a bottom in the U.S. dollar with recent increases suggesting a trend reversal is beginning.   A stronger dollar lends to a weaker export psychology.   My opinion is demand yearly has strong periods and soft ones.   Since 70% of our exportable feed grains go to Asian markets and China going from exporter of corn to Asian neighbors, to world importer this year, demand will remain strong on the year.   Monday's crop progress report showed 27% of our corn crop is now planted vs. 10% the week prior.   We are still well under a year ago of 45% and our 5 year average of 59%, due to excessive Midwest rains.   It is certain that yearly and five year comparisons will show us logging the next two weeks as more rain abounds.   WXRISK.COM sees rains of .50 to 3.00 across the Midwest today and Friday, with Missouri and Central and Southern Illinois and Indiana getting the heaviest totals.   Sunday into Monday look very wet as well with another system coming in for next Wednesday and Thursday.   There is going to be concern over further planting delays and that corn planted after May 15^th generally sees lower yields.   Planting delays and a thinking Friday's USDA crop report will be bullish will keep sellers on the sidelines.   Be careful next week…   When we come in Monday and this week's rains and USDA report are behind us and Monday's crop progress report shows over 50% of the crop planted the psychology could change from weather's influence over planting delays to weather and its impact on what's planted.   The rule of thumb, is when one third of the crop is in 90% of our pricing is weather's impact on growing emergence.   Friday's crop report is due out at 7:30a Central Time is expected to show that next year's ending stocks to be half this year's 1.2 b.b. ending stocks.   Long term, any problem with this year's crop due to weather, could create fears of running out of corn next year leading to price rationing and prices exceeding 10.00 easily.   That is up to Mother Nature now.

Monday's weekly export inspection report showed 11.8 m.b. of beans were inspected for near term export, off from 15 the week prior.   This is equal a year ago and 15% on our four week average.   Demand on the year should remain strong but our recent 2.50 cent March into April 15^th rally has to some extent slowed exports while a slow corn planting pace the last two weeks has traders feeding we may plant less corn and more beans all lending to softer sales near term.   The Argentine farm strike is on and off daily with no current resolution.   Our first crop progress report of the year showed 5% of our bean crop is planted vs. the five year average of 14.   No concern on planting delays here as they have all of May to plant on normal planting dates.   Friday's USDA report is expected to be bullish as early talk has this year's ending stocks coming in 8 m.b. under last month and next year at 273 m.b. even though we are to plant 11 m.a. more beans this year.   It is an increase that assures we will not run out but far less due to strong demand expectations.   Everything remains positive like corn but next week could be different.

The weekly export inspection report showed 19.5 m.b. of wheat was inspected for near term export, unchanged from the week prior and a year ago while under our four week average of 19.7 m.b.   The new marketing year begins June 1^st for wheat as winter wheat harvest begins leaving old crop business just hand to mouth as needed.   The report is neutral to demand.   Our crop condition report showed 47% of our winter wheat crop in good to excellent condition up 1% from the week prior and second consecutive week but still under a year ago of 57% G-E.   May is our key yield and quality development time.   Currently 26% of the crop has developed the head.   Rain totals on this current rains look to improve quality levels for next Monday's report by 2 or 3%.   58% of our spring wheat crop is now planted with 11% emerged.   Not the best planting weather but soil moisture is ample.   Our Kansas City July Wheat Futures on the winter crop still look bearish near term.   At some point late May, a demand rally will occur as end users scramble to get harvest crops as bins are empty but near term weather looks negative.   Friday's USDA crop report is expected to show next year's ending stocks at 442 m.b. vs. 242 this year.   World ending stocks could have the biggest increase.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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