Alaron Grains and Oilseeds Comment

CHICAGO - May 16/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 547 t.m.t. of corn was sold last week up 62% from the week prior and 14% under our four week average.   Asian sales picked-up with 215 t.m.t. sold vs. 185 the week prior.   All said- it is neutral for demand after five consecutive bearish weeks.   There is some talk of larger Asian sales in June but most of the market pricing remains weather and its effect on the crop through August 5^th.   With the reduced rain in this week's forecast, we should see Monday's crop progress report show 75 to 80% of our crop is now planted with 92% by Saturday 24^th.   We are in that gray area now moving out of weather's impact on planting to weather's impact on early emergence.   Traders are not worried about early emerging corn weather as much, as soil moisture is at a surplus to insure Midwest crops sprout with energy.   Weather's impact on the growing season begins June 10^th through August 5^th; that period will find weather reports critical.   WXRISK.COM releases his summer forecast for June 1^st through August Friday afternoon and we anxiously await our first look at ideas for the growing season weather.   We hit the buy area I called for of 6.10 to 6.00 Thursday.   Support on December lies at 6.00 so again, any move to 6.10 or lower add on lightly.   We need a close over 6.34 to add to longs.

Thursday's weekly export sales came in at 201 t.m.t. of beans sold last week after marketing year low 41 t.m.t. the week prior.   The key here is China, in for 65 t.m.t. vs. zero last week.   It could be they are legging back in as the Argentine farm strike started again May 7^th.   In March, when they first went on strike, China was in for 31 m.m.t. of beans.   When they put the strike on hold in April, U.S. sales fell.   Now the strike is on again and if continues for 3 or more weeks we could see a surge in exports again.   In addition to the export sales report, the USDA announced China purchased 126 t.m.t. of U.S. beans Thursday, that will show up on next Thursday's export sales report.   Large trading funds spent Monday through Wednesday, buying all dips in beans after our USDA crop report said ending stocks next year will be dangerously low.   Not that they have balanced their bean and corn holdings they await beans planting progress to exceed 75% by month end and kick off the uncertainty of our growing season.   I still like buying November anywhere near support of 13.00 but watch out as risk is down in the gap between 12.55 and 12.85.   Daily volatility besides weather updates remain sharp changes in crude oil and the dollar index.   A talk of putting the Argentine strike on hold would drop beans 20 to 30 cents any day.

Thursday's weekly export sales showed old crop sales before June 1^st at 120 t.m.t. down 33% from the week prior and new crop sales for after June 1^st.   The beginning of wheat's new marketing year at 443 t.m.t.   Everything remains bearish wheat.   Weather on around the world emerging crops is good.   Acres are up everywhere, thanks to record high prices recently but be aware that there could be a change coming that might post a last half of May low and a June harvest demand rally.   World stocks are at 40 year lows with U.S. Stocks for 2008 at 60 year lows.   Bins and warehouses are empty.   When harvest gets underway through June, we may see every other bushel going into storage for another day.   This is after the last year saw millers, exporters and end users paying historic cash high prices as their shelves were bare.   If every other bushel gets taken off the market for long term security insurance you effectively have half a crop to satisfy wheat's demand appetite.   This harvest will be one of the most sought after in history.   Supply side pricing is near with a demand driven market next in line.

END.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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