Alaron Grains and Oilseeds Comment

CHICAGO - May 9/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

 Thursday's weekly export sales report showed 337 t.m.t. of corn was sold last week off 39% from the week prior and 50% under our four week average.   Key U.S. grain buyers in Asia were in for 185 t.m.t. vs. 256 and 485 the two prior weeks.   Clearly recent historic high prices have importers backing off.   Friday's monthly USDA crop report put ending stocks for the beginning of our 2008 marketing year for corn:     September 1^st, at 1.383 billion bushels, and our September 1^st, 2009 ending stocks at 763 million bushels about in line with pre-report trade guesses.   Now, this is dangerously low 2009 ending stocks will occur only if we have a perfect growing season; these are hard to come by as it is always too hot here or too dry there.   Any problem with weather from June 1^st through July, our key growing period that reduces yields and price rationing will occur.   12.00 corn or higher could occur if weather turns foul as a price to discourage over consumption will be necessary and we all saw that happened to wheat when price rationing entered.   It is all up to Mother Nature now.   When we come in Monday, the trade will say “what crop report?â€�, how is the weather and planting going?   WXRISK.COM sees big rains across the Midwest with 80% coverage of 1 to 3 inches then 90% coverage of .50 to 2.50 inches Wednesday and Thursday.   This means very little planting occurred between this Thursday and next.   Monday's crop progress report at 3:00p Central Time should show 50% or more planted so, we have to watch out for a psychology shift eventually from too much rain slowing planting- and higher prices to rain benefiting the crop in the ground pulling us back.   There will be profit taking before month end.   Trade the next weather report.   December new crop corn has support at 6.38 then 6.20 Monday.

Thursday's weekly export sales report showed 41 t.m.t. of beans were sold last week down 87% from the week prior and 91% below our four week average.   Maybe now that Argentina farm workers are back to a strike on grain to port for export, China maybe forced back in for U.S. beans to fill the hole.   Friday's crop report put ending stocks for this year at 145 m.b. down 15 m.b.; from last month and pegged our 2009 ending stocks at 185 m.b. only 40 m.b. more than this.   The report essentially said that even though we will plant 11 m.a. more this year, demand and usage will chew up all but 40 m.b. of its yield, leaving stocks this year and next, dangerously low.   Beans like corn, are one dry stretch this summer from talk of running out of beans next year.   A drier than normal western beans belt along could lose 185 m.a.   So, weather will be critical from June 15^th to August 20^th, the key growing period.   The long term will play out as weather dictates.   Near term we will trade current weather updates.   November new crop beans have support at 12.50 Monday.   One of the thoughts lost in this report to most is what the ending stocks mean to planted acreage intensions for next year.   Last year we planted 14 m.a. more of corn and 11 m.a. less beans to insure we do not run out of corn this year and this year we are planting back the 11 m.a. we lost last year.   This is in hopes we do not run out of beans next year.   The big question will be, ‘where will corn and beans find the acres needed in the Spring of 2009 to build inventory from current desperate levels?'   We are set up for the biggest heavy weight fight between the two to win acres this market has ever seen.

Thursday's weekly export sales report showed 178 t.m.t. of wheat sold for old crop season and 312 t.m.t. for our new wheat marketing year June 1^st for a 490 t.m.t. total.   It is neutral as 550 or higher is needed to be bullish.   As you can see, they are all buying new crop now.   Friday's crop report was about as expected.   Our 2008 ending stocks put at 60 year low 239 m.b. vs. 243 last month and our 2009 ending stocks at 483 m.b.- thanks to an expected 16% increase in production, while exports are expected to decline 24% due to larger world production at 124 m.m.t. vs. 110 this year.   They put all wheat production at 2.392 b.b. vs. 2.067 last year.   Winter wheat at 1.778 b.b. vs. 1.516.   Hard red winter wheat 1.011 b.b. vs. 962 m.b.   Soft red wheat 551 m.b. vs. 358 and white wheat 126 vs. 197 m.b. last year.   Ignore it.   It is all about weather and its effect on maturing winter wheat fields through May and Spring wheat fields through August.   With good hard red winter wheat state rains Thursday and more Sunday into Monday, we expect Monday's crop condition report at 3:00p to show improved quality.   We could see the July new crop Kansas City Exchange winter wheat contract push to 8.00, if next week's crop improving rains happen.   We need a close over 8.75 to turn technically bullish.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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