Alaron Grains and Oilseeds Comment

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

Thursday's weekly export sales report showed 524 t.m.t. of corn was sold last week down 1% from the week prior and 2% over the four week average.   On the surface its neutral but to the trained eye it is bullish and here is why.   70% of our exportable feed grains go to Asian markets.   Of last week's 524 t.m.t. sold, 309 t.m.t. went to Asia vs. 90 and 232 the weeks prior.   The Asian markets have been sitting on their hands recently, and not buying as much due to corn prices pushing record levels but they appear to be coming back on fear that corn acres are clearly going to be smaller this year.   June corn prices may end up cheap compared to July and August prices.   We ended the week with historic high prices as rains in the western corn belt and upper plains left many farm fields flooded with talked going from corn acres being damaged to now being destroyed.   Tuesday's USDA monthly crop report estimated that next year's ending stocks will be 673 million bushels vs. 1.433 billion bushels this year.   The 673 m.b. was down from 750 on the May report as the government lowered potential yields by about 5 bushels per acre due to late planting and slow emergence.   What they have not addressed is how many of their estimated 86 m.a. will go unplanted and how many acres were planted that are flooded out and unable to re-plant.   That is were the June 30 final planted acreage report comes in.   Traders will fear the report could show from 3 to 6 m.a. less will come to production.   This will have the trade looking for ending stocks to near empty.   The best chance for any profit taking to pull prices down for a better price to buy will be next week.   Weather looks a little better as there is no call for heavy rains, so the worst of the flooding rains maybe over.   If funds want to take month end profits off our historic rally next week's the time as the week after which is June 23^rd to the 27^th; is the week prior to the big Monday, June 30^th   planted acreage report.   This leaves the week prior as the last chance for funds and traders to get positioned long.   The risk in hoping for a near term correction to buy is if we come in Monday and change the weather for the week from drier to wetter.   Near term the next 30 days 8.00 plus December corn is reasonable with 12.00 corn in July to early August if dry conditions enter any segment of the Midwest grain belt.   Next week December corn find support at 7.10 Monday and 7.14 Tuesday- This would be a premium buy point if touched.

Thursday's weekly export sales report showed 272 t.m.t. of beans were sold last week off 9% from the week prior and 4% under our four week average.   Sales to china were 80 t.m.t. down from 225 the week prior.   When Argentina farm workers put the farm strike on hold last Tuesday, China started to look to South America for cheaper beans but they have surely become disappointed as even though the strike was put on hold verbally.   No grain has shipped out of their ports.   Truckers are on strike and growers stopped moving grain to ports; this should have U.S. shipments pick up.   Tuesday's USDA crop report put ending stocks of beans for next year at 175 m.b. down 15 m.b. from the May report due to late plantings and slow emergence leading to lower yield expectations.   The big question is what will the June 30^th acreage report show?   Will farmers take unplanted corn fields and switch to beans offsetting flooded bean field losses or will we come in lower off the same issues on corn of too much rain, too flooded and too late.   Either way, the fear ahead of the report will be acres will come in lower leaving beans to firm up the week prior June 30^th.   Next week we waddle around the price charts off outside market influence and weather changes and fear.   November futures find support to buy at 14.75.   Any problems with weather, especially dryness, between July 15^th and august 20^th and 20 dollar plus beans on price rationing corn occur.   What we have to remember is that of the 11 m.a. more to be planted this year to insure we do not run out of beans, most of those acres were in Nebraska and Iowa the western grain belt that has the worst of the record rains.   Though corn is getting the highlights as corn planting is over, beans may end up the biggest loser on production when it is all over.

Thursday's weekly export sales report shoed 335 t.m.t. of wheat was sold last week vs. 190 the week prior.   More than 6 different countries came in to buy.   Harvest of our winter crop is two weeks behind but countries in need of wheat are moving in to get near term needs.   Potentially build inventories that are at historic lows.   Wheat has pulled off its June 2^nd to 4^th lows as shorts recognize that bearish supply side news is priced in demand rising at least has those who were short buying out.   September Minneapolis spring wheat futures contract appears to have put in a near term low off the 8.40 area.   Crop condition ratings are good as of Monday, but recent rains this week has talk of flooded out fields.   Wheat bins empty in the U.S. our spring wheat crop to come to harvest late July into August looks to be in high demand.   I would stay long September unless a close under 9.25 occurs.   Wheat's news is feature-less now as our winter crop is now coming to harvest and world production looks to be a record.   We need something new to enter and that could be a strong demand resurgence.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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