Alaron Grains and Oilseeds Comment

CHICAGO - Jun 6/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 530 t.m.t. of corn was sold last week, up 11% from the week prior and 14% over our four week average.   This is a better number on the week, but one problem is here.   Key U.S. corn buyers in Asia were absent.   Asia bought on 90 t.m.t. vs. 230 and 240 the two proceeding weeks.   Now, one could say sales were better without Asian but Asian business is the key to long term U.S. corn exports.   Near term demand remains decent but not great.   Long term remains very good.   The rally this week is very simple if you can add.   It has been raining in the Midwest since Tuesday.   Monday's crop progress report suggested four to five million acres were left unplanted and ‘ponds' of water in low lands in the western corn- belt left re-planting of those acres a week or more away effectively suggesting that five to six m.a. less acres of corn will go unplanted as the planting window has closed.   The last USDA report suggesting our ending stocks come next year at a little over 700 m.b. vs. 1.4 b.b.   The year with a perfect growing season, we must now consider that running out of corn before our 2009 harvest is reasonable.   Needless to say, that will not happen as the function of the market is to ration a crop.   When wheat early this year saw ending stocks at 60 year lows in the U.S., the price of spring wheat pushed from $8.00 - $25.00 and hard red winter wheat from $8.00 - $13.00 to insure usage would drop enough not to take ending stocks to 100 year lows or none at all.   With any further problems to this corn crop especially in July to mid-August, price rationing will have to occur to insure we do not feed, use and or export the corn crop to zero stocks.   $12.00 corn or higher could easily be seen.   Many market analysts will soon ponder the thought that Mother Nature may average things out taking this near record spring rain totals to a very dry summer totals.   Corn's December high price today took out a thirty year resistance line on historical charts.   Come Monday, we have minor support at 6.58 with major support at 6.20.   The USDA has its monthly crop report out Tuesday ahead of the opening.   Traders expect Tuesday's report to be friendly to prices and with Monday's crop progress report to show planting delays we can not expect a bigger correction on Monday.   WXRISK.COM sees next week warm but very wet again further causing problems to farmer's planting.

Thursday's weekly export sales report showed 298 t.m.t. of beans were sold last week up 22% from the week prior, and 37% over our four week average.   China was in for 225 t.m.t. vs. 73 last week, thanks to the Argentine strike beginning again last Wednesday; and continuing this week.   Currently the strike has no ending deadline.   It will not be put on hold or end until another government agreement to meet is scheduled.   As long as the strike is on farm products it will not move to ports leaving the U.S. to fill the hole.   Without China's business exports would have been near nothing.   Tuesday's USDA crop report should show lower ending stocks for beans on better exports thanks to Argentina's problems and Monday's crop progress report will continue to show a record wet spring has bean acres unplanted especially in the western grain belt and replanting of flooded low lands on hold indefinitely.   This keeps Monday's action, though volatile, from any major drop.   If you have not subscribed to a weather service yet- please do- as up to the minute weather updates are critical.   Go to WXRISK.COM or call:   571-223-0513 and get their summer package.   They are the most accurate for grain traders.   November beans have minor support at 13.85 and major support at 13.25.

Thursday's weekly export sales report showed 140 t.m.t. old crop sales and 97 new crop.   Not a good number for new crop from the week prior; but the list of buyers were interesting.   Egypt a key world wheat buyer was in as well as in Brazil, that has turned to the U.S. for near term needs as Argentina's farm strike has no wheat moving across the border as farm workers have been blocking roads.   Overall, I look for demand to increasingly become better each week into July as our winter wheat harvest progresses and exporters and millers with empty bins gather supplies.   Nice rally this week- largely because sellers can not find anymore bearish news than the world record crop this year that has pressured prices the last several months.   Higher feed grains have traders covering shorts even oat shorts have been buying out and that crop could not look better.   September Minneapolis spring wheat had major resistance at 8.75 blown out today turning charts bullish, next resistance is 9.25 then 10.25.   July K.C. wheat if a close over 8.50 occurs, finds 8.80 next stop.   C.B.T. July wheat has resistance at 8.50 a close over here and 9.60 is next.

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Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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