Alaron Grains and Oilseeds Comment

CHICAGO - Jul 1/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Markets are closed this Friday, in turn; the Week's End Report will be posted on Thursday!

Monday's weekly export inspection report showed 39 million bushels of corn was inspected for near term export; up from 37 the week prior and four week average, and just over a year ago of 38 m.b.   It is a friendly demand number considering we hit new contract highs Friday.   The USDA Planted Acreage Report showed 87.3 million acres were planted vs. 86.0 on the March 31^st report.   This was over the average pre-report trade guess of 85.3.   The government essentially said we do not know the amount of acres lost due to the historic flooding by spring rains across the Midwest as they came after our reporting system.   So they went with the original thinking from the planting intensions as to what farmers planned to plant and what was planted.   The government did what they prefer to do, and play it conservative and not guess.   These numbers are a starting point like we had on March 31^st, plus possibilities that corn's higher spring prices may have switched bean acres to corn as many had hoped.   Now, the government said a new planted acres report will come out in August and be more complete.   They then will consider what farm land was flooded along the Mississippi River and not replanted; and what Midwestern states had flooded low lands that either were or were not reseeded.   The real numbers on acres will eventually surface.   Next big report is the monthly report by the USDA on July 11^th, when they can adjust yield expectations and ending stocks.   Monday's 3:00p crop condition report showed 61% of the corn crop was in good to excellent condition up 2% from the week prior up for the second consecutive week but still under a year ago of 73%.   The only key producer in real trouble is Missouri at 44% G-E up 1 on the week.   Last week generally saw warmer and summer days and corn was in need.   Corn has been the leader this spring over beans but now that corn acres at least temporarily are higher while beans lower than on March 31^st beans become the leader.   Monday saw funds take month end profits off the less than bullish report will Tuesday seeing spreading with buying beans and selling corn as beans assume the leadership-roll.   If beans continue to strengthen, today's low will hold for the week but profit taking in beans could lead to a new low.   The market attention turns to weather and its impact on emerging corn and beans.   WXRISK.COM sees 1 to 2 inches of rain with 80% coverage Thursday and Friday over all of Missouri, Indiana and Ohio and Central and Southern Illinois, while suggestion has a very hot and dry week next week.   This leaves this week's weather favorable for crop development, but a return to dry and hot if extended beyond next week could be very price bullish.

Monday's weekly export inspection report showed 18.4 m.b. of beans were inspected for near term export, up from 10 the week prior, 8.5 a year ago, and our four week average of 9.5 m.a.   After hitting contract high prices Friday, and demand signals higher we need to view the report as friendly to demand, but not bullish.   Argentina will have its congress address recent farm worker issues and this could lead to more or less beans coming out to compete against U.S. sales.   Monday's acreage report came out flat at 75.5 m.a. planted vs. the March report of 74.7 and average pre-report guess of 74.2 m.a.   Like the corn numbers- the bean report is more of a planting intention report, like the March 31^st report and the new August acreage report looks to be the final numbers that factor in the worst of the spring floods.   Monday's post close crop progress report put planting at 95% complete vs. 91 the week prior.   Worst state was Missouri at 75% seeded vs. 95 a year ago.   The crop condition report showed 58% of the crop in G-E condition up 1% from the week prior, up for the second consecutive week, but under a year ago of 68% G-E,   Missouri came in the worst of key producers at 35% G-E up 1% from the week prior.   Like corn, beans too benefited from warmer, sunnier days.   Beans strength Monday and Tuesday came as even though the acres estimates were over pre-report estimates, it was slightly under the March 31^st report, and with fear the poor spring planting will bring a lower acres estimate in August and a lower yield expectation.   This leaves fear of running out of beans in 2009, with current consumption.   The report Monday did not give everyone what they expected but one thing is certain and that is were one dry stretch in July through August have having corn and beans move into a price rationing rally to insure demand and usage pulls back.

Wheat's weekly export inspection report showed 15 m.b. were inspected for near term export, off from 18 the week prior, 25 a year ago and four week average of 18 m.b.   It is off a little, but we had a big four week rally and it is not off enough to say demand has turned down.   Monday's planted acreage report put all wheat varieties at 63.4 m.a.; vs. the March 31^st of 63.8.   Spring wheat was put at 14.1 m.a. vs. March at 14.3 and durum at 2.6 m.a. was unchanged from the March report.   A yawner- After last week hit a four week rally-high, funds took profits pulling wheat down 52 cents on Monday's close on most exchanges.   This addresses monthly profit taking as well as addressing the report.   Monday's crop progress report showed 36% of our winter wheat crop is now harvested vs. 48% on our five year average.   Drier conditions in the Western wheat states this week should see a pick up in harvest.   However, early samples continue to show a less than desirable quality of yields but were starting the harvest first in the far Southwest, where dry growing conditions gave us our lowest yearly ratings.   As custom cutters move north into Kansas and Nebraska, quality should improve.   Our spring wheat crop has 28% of the crop with the head developed its key yield development time, so we are moving into a very important weather time now for the spring wheat.   The condition report showed 74% of the crop in G-E condition up 2% from the week prior, up for the fifth consecutive week but under a year ago of 79% G-E.   No problem here- it is getting better by the day.   A little short covering after the opening today on over sold pricing Monday.   Wheat is going to watch spring wheat state weather and demand; but largely it will follow corn and beans.   Look higher in July.

 End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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