Alaron Grains and Oilseeds Comment

CHICAGO - May 13/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Monday's first report came with our 10:00a weekly export inspection report showing 34.2 million bushels of corn was inspected for near term export vs. 35.3 the week prior and 40.9 a year ago.   This is not bearish but does suggest we are still in our month long slow down in demand.   After the close at 3:00p Central Time, the crop progress report showed 51% of our crop is now planted vs. 71 the year prior and 5 year average of 77%.   Key Midwest producers were:   IL 60%, IN 61, IA 46, MO 34, NE 55, and OH 50 planted.   11% of our corn is emerged from the ground.   When we went home last Friday, all the weather models had a big rain for Wednesday and Thursday this week but that changed Sunday leaving rain tomorrow and Thursday.   With only 50% coverage of .15 to .75 inches far less than what was expected.   This brought on profit taking Monday and today.   Four of the last five weeks saw new contract high prices followed by a 30 to 42 cent correction.   After hitting 6.55 basis December Futures last Friday and new highs we pulled down 38 cents at today's low.   Even if this week's rain would have come in heavy as expected, we would have moved up Monday only to see a price correction Tuesday and Wednesday, as 51% is planted and benefiting from the rain.   The weather through Sunday is not great, but if we can make the jumps in planting the last two weeks as wet as we were, we are surely to make a big planting move to 75% done or better by next Monday with drier conditions.   Then the wet weather will bring on talk of “rain makes grainâ€�.   We came in today with 6.24 as support.   The opening range low was 6.17.   A close under 6.24 makes 6.00 the next support.   The key to the rest of this week is if weather for Thursday and Friday turns wetter than expected.   WXRISK.COM at mid-session reported one weather model moving this next system more into the Midwest.   If this occurs then we can hold near term lows.

Monday's weekly export inspection report showed 13.1 m.b. were inspected for near term export vs. 14.6 the week prior and well over a year ago of 8.8 m.b.   Not a bullish number but a friendly number that may get better near term now that Argentine farm workers are on strike again and not allowing grain to move to ports.   Monday's 3:00p crop progress report showed 11% of our bean crop is now planted vs. 26 last year and our five year average of 29%.   With corn planting behind normal and farmers rushing to get corn planted first we have to expect bean planting to log but we have until June 10^th to plant so it will get in on time.   After Friday's bullish report, beans are the ‘new kid on the block'.   With a projected 185 m.b. ending stocks figure for 2009, we have no margin for error in the growing season.   Friday's report has had unwinding of long corn, short bean spreads and buying of breaks such as today.   A close over 13.15 sets November up to test 13.50.   12.75 is support with a chart gap from 12.55 to 12.75.

Monday's weekly export inspection report showed 20.5 m.b. of wheat was inspected by the USDA for near term export vs. 21.9 the week prior and 23.6 a year ago.   It is about as expected as most importers await cheaper prices off current price trends and fresh harvest to begin around June 1^st.   After the close Monday, our hard red winter wheat crop condition report showed 47% of the crop is in good to excellent condition unchanged from the week prior.   The trade had expected a 3 to 4% increase after good rain last week.   We are behind a year ago of 58% G-E and not improving while 38% of the crop has developed its head.   So far the trade seems unconcerned by the crops lack of development.   Our spring wheat crop is off and running at 81% planted and 25% emerged.   Next week will bring our first crop condition report, and a basis to invent trades off.   In the mean time, the winter wheat crop still finds trouble in key states with number on wheat producer Kansas at 45% G-E only up 1% on the week.   Colorado 28% down 1%, Oklahoma 52% down 2% and Texas 20% G-E down 2 on the week.  

The issue seems to be that even though struggling here a little, overseas wheat markets are doing well.   Wheat remains mildly bearish.

End-

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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