Alaron Grains and Oilseeds Comment

CHICAGO - Jul 24/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 323 t.m.t. of corn was sold last week from old crop supplies down 12% from the previous week, but up 2% from our four week average.   Key Asian business was 262 t.m.t. vs. 240 the week prior.   The break from 8.00 has had importers patiently waiting for lower prices, while our regular Asian business is picking up.   I see prices higher in early August before the August 12^th crop report and that should encourage importers to re-enter.   Demand remains neutral at best into months end.   Looking at weather- WXRISK.COM sees 85% of the Midwest grain belt getting 1 to 4 inches of rain the next four days.   This essentially is the best rain total and coverage since planting ended and surely sets us up for improved crop conditions on our Monday 3:00p crop condition report.   Needless to say- our daily trading strategy remains to trade whatever the next forecast says.   However, for the long term we need to be ready for that dream trade.   On August 12^th, the USDA will release its final numbers on how many corn and soybean acres were planted.   Their last estimate was June 30^th and was supposed to be the final planted acres number of the year.   However- a problem arose.   As final farmer surveys through June 10^th were occurring the Midwest was seeing historic rain totals flooding farm lands in Iowa, Southern Wisconsin and then the breeching of the Mississippi river flooding farm lands along a 400 mile stretch.   The government's June 30^th report was more of a planting intension report leaving the August report as ours finally.   Regardless of what the report says, the fear will be that the report could show from a 1 to 3 million acre reduction in corn acres planted from the June 30^th report.   Most believe the heavily flooded farm lands could not have dried out and is re-seeded before the planting window closed.   With our last USDA crop report putting ending stocks for corn come next year- September 1^st, 2009 at 833 m.b. vs. 1.6 b.b. this year or half the amount, a reduction of 3 m.a. could cut ending stocks sharply again setting in motion a price rationing rally.   We need to buy the July low and get long into the August 12^th report as anyone short will surely be buying back those positions and speculators will want to buy long ahead of the report.   Near term weather next week will determine if this week's low is the month's low or next week gives us another dip.   If weather next week comes in generally wet again we might get a chance for another low to buy.   Our dream price on December futures to buy is between 5.20 and 5.40.   Any move into that area needs to be bought.   If we come in Monday and forecasts turn hotter and drier, we will have to find another spot to buy as this week's lows will hold into August 12^th.

Thursday's weekly export sales report showed 183 t.m.t. of old crop beans were sold last week vs. 63 the week prior but key player China was in for zero again as grain begins to flow out of Argentina.   New crop sales of beans for after September 1^st shipment were 552 t.mt. with China in for 410 t.m.t. of the total.   Old crop sales were bearish, but new crop sales were bullish and with China's big purchase it shows their intension to be big U.S. buyers of beans when the new marketing year and harvest begins.   Brazil and Argentina will capture near term exports; but September on out sees the U.S. as the world's primary port of purchase.   Okay, now what?   Everything I noted on corn, applies to beans.   The August 12^th planted acreage report will be feared to show a 1 or 2 m.a. decrease in planted acres due to June floods.   Ending stocks for September 1^st, 2009 are pegged a dangerously low 140 m.b. a reduction in planted acres cut have to USDA cut ending stocks to 20 or 60 m.b. or about zero in the minds of end users.   So, where is the July low to buy?   Only near term weather knows.   If we come in Monday and see hot and dry, beans basis November futures could push quickly to resistance of 14.40 putting this week low to hold into August 12^th.   If we enter and see another crop improving rain next week, we have a chance to make another low between 13.40 and 13.10 which needs to be bought long.   Remember:   Beans yields are determined in August during the pod setting stage.   A hotter and drier August and a August 12^th crop report acreage reduction and new contract highs will be made.   Drean trade, buy Nov. between 13.40 and 13.10.   If weather turns bullish we will have to look for a less desirable price to get long.   With weather being critical for bean pricing consider getting a service which supplies in stand weather e-mails like WXRISK.COM or www.weatherby request.com that is offering a growing season August and September package.

Thursday's weekly export sales report showed 610 t.m.t. of wheat was sold last week down 19% from the week prior, and 4% under our four week average of 630 t.m.t.   Though down on the week it is still a very good demand number.   I look for demand to remain good through the finish of our spring wheat harvest in August.   Wheat has little news of its own.   It remains largely in a followers roll to corn.   If weather turns bullish for corn it is bullish for spring wheat and the reverse as well.   September Minneapolis spring wheat futures have major support at 8.50.   a close under here leaves 8.10 as next stop.   We need a close over 9.00 to turn bullish.   A close over 9.00 sets up a test of the top of the chart gap at 9.25 then our resistance line at 9.40.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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