Alaron Grains and Oilseeds Comment

CHICAGO - Jul 3/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

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Thursday's weekly export sales report showed 325 t.m.t. of corn was sold last week vs. 231 the week prior and 20% under our four week average.   Not a good demand number as 600 t.m.t. plus is needed but Asian sales were better at 350 t.m.t. vs. 160 the week prior.   Demand for corn world wide remains at record levels on the world's expansion of ethanol and Asia feed lot expansion demanding more corn but it is clear recent record high prices have ethanol plants here trimming production and our recent cattle on feed and hog reports showing reductions in animal numbers to be fattened on corn.   It is a sigh of price rationing but a mild one.   We can cut usage in all area here but unless we cut exports the world will take what corn we do not use for ourselves; as there is no sign of price rationing their needs.   With the acreage report out of the way until the August update.   It is all about weather and its impact on the crop's condition.   Traders now will say we are more concerned about weather's impact on what has been planted vs. what was not planted.   With the current planted acres estimate of 87.3 m.a. and our current yield estimates, both surely to change.   A 3 to 4 bushel per acre drop in yield would cut our ending stocks from 1.4 b.b. this year to near zero next year, unless the price moves high enough to discourage usage.   This will be the biggest year for weather's impact on production not just because demand is outstripping production- but we have gone from 100 million dollar trading funds to 100 billion dollar trading funds.   All price moves become exaggerated.   So, what is the weather?   Hats off to WXRISK.COM, my preferred weather site as his forecast last fall for a colder, snowier Midwest winter followed by a cooler, wetter and later spring planting season all come to be.   That fall report also said look for a hotter, drier, pattern July into September- that is to be seen.   WXRISK.COM sees next week as very hot and generally dry, and a strong chance of hotter and drier into July 18^th.   We know a big heat dome has been sitting west of the Rockies for four weeks, threatening to move into the western grain belt.   It appears next week it will but will it stay or fade back allowing some rain to enter.   Needless to say, we trade the next forecast what ever it says.   The current forecast say stay long into next week or until the forecast changes.   Traders looking for a wild card trade can look at the December 12.00 corn call for 7 cents or $350.   Any weather problems in July and august would set corn in a rationing mode making those calls very profitable.   Less conservative option play is buy the December 8.00 call and sell the 9.00 call for 24 cents or $1,200.   You have 30 cent limit risk on a futures play everyday and that is $1,500.   Futures basis December have major support at 7.36.   As you know I recommend highly the weather site WXRISK.COM but I juggle at least five forecasting groups.   There is a new site in town you might check out:   www.weatherbyrequest.com.   You can not have too much weather news this time of year.

Thursday's weekly export sales report showed 465 t.m.t. of beans were sold last week, up from zero the week prior; when china cancelled previous orders.   China came back in for 200 t.m.t. on this report but demand takes a back seat to weather.   As you know, Monday's acreage report showed 74.5 m.a. were planted.   With near perfect growing weather into harvest, we look to see ending stocks to near 100 m.b. a 3 or 4 b.p.a.   Drop in yield would leave us to run out of beans next year unless prices went high enough to shut off demand.   This is what we are dealing with through august our key yield time.   A stretch of hot and dry weather now could send beans well over the $20. mark.   Like my corn wild card beans have a wild card trade too.   Consider a November 30.00 beans call at 3 cents or $150.   If we turn dry and beans move into price rationing, $22. beans could easily be hit by mid-August putting the 30 dollar call at about 28 cents.   Or consider buying the November 17.00 call and selling the 20.00 call for 68 cents or $3,400.   You have 3 dollars potential or $15,000.   The futures have 70 cents limit risk everyday or $3,500.   We have minor support on November futures at 15.75.   a close under here and 15.10 is next support.

Nothing came out of Monday's acreage report for wheat to follow.   Our winter crop should 50% harvested by Sunday and our spring wheat crop growing has 70% of the key head development time ahead of us.   Wheat has priced in the world production and unless weather damages our spring wheat, it looks to assume a followers roll to corn.   September Minneapolis spring wheat futures have support at 9.25.   A close under is technically a sell.

 End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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