Alaron Grains and Oilseeds Comment

CHICAGO - Aug 5/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Monday's first report came with our weekly export inspection report showing 29.6 million bushels of corn was inspected for near term export, down from 41.5 the week prior.   This is just under our four week average of 31.2; but over a year ago of 26.3.   Year to date inspections are 287 m.b. over a year ago.   The break lower from the week prior comes as prices were largely higher into Thursday's opening range before selling into Friday occurred.   Importers could not come in to make purchases so late in the week to take advantage of softer prices, it is neutral to demand.   Monday's 3:00p crop condition report showed 66% of the crop is in good to excellent condition unchanged from the week prior but 10% over a year ago.   83% is at its key silking stage.   The good weather this week looks to save the crop from any appreciable yield losses before harvest.   Stress could enter but most believe a yield over 150 b.p.a. is certain.   As expected- corn came in Monday and saw a week with adequate rain and cooler temperatures and no sign of a returning heat dome.   This brought prices lower Monday's and Tuesday's opening before shorts fat with profits began buying out pulling us 30 cents off opening lows by mid-session.     We have priced in the week's weather leaving today's low as possibly the low prior to next Tuesday's big USDA final planted acres number.   The fear in the market will be a acreage number 2 or 4 million acres under the government's last report, so no one wants to be short into it.   This should lend to firmer prices ahead of it.   The wild card is if we have a day were crude oil is down 4 or 5 dollars sucking down metals, softs and grains with it- we could see another new low.   That will be short covered as well.   Today was an exercise in profit taking with corn and beans down and up on the day four different times.   Wednesday looks similar as near term weather leaves traders selling rallies while potential bullish crop report next Tuesday has shorts buying out and bottom pickers guessing.

Monday's weekly export inspection report showed 7.5 m.b. of beans were inspected for near term export, off from 12.5 the week prior and a year ago.   Our four week average is 7.2.   The stronger prices into Thursday's open before the late week sell off led to our lower inspections.   It is a neutral near term demand signal.   Monday's crop condition report showed 63% of the crop is in G-E condition up 1% from the week prior and 7% over a year ago.   37% of the crop is in its key pod setting stage.   Like corn- beans too see this week with cooler temperatures and timely rain bringing lower prices Monday and today's opening before pulling 50 cents off our low on short covering.   Weather remains a negative force but we hope we have found a near term low today that would hold into next Tuesday's report.   The wild card is crude oil.   If our Wednesday 9:30a inventory report on crude oil.   If inventories drop, crude will rally pulling corn in beans but we think it should show on increase pulling crude oil down as grains open pulling down corn and beans early.   Expect short covering again as traders get positioned and or balanced prior to the August 12^th acreage report.

Monday's weekly export inspection report showed 27.4 m.b. of beans were inspected for near term export, up from 21.9 the week prior, equal a year ago and over our strong four week average of 20 m.b.   Year to date wheat inspections are up 32 m.b. wheat demand continues strong as our winter wheat crop winds down and spring wheat harvest gets underway.   Demand will remain strong through August as our spring wheat harvest ends and end users aggressively buy product to fill empty bins from this early spring.   The Monday crop condition report showed our spring wheat crop at 56% in G-E condition own 4% from the week prior and 13% under a year ago.     6% is now harvested.   After trading down sharply Monday, and a lower open Tuesday, wheat in Chicago rallied from 7.49 to 8.04 before closing at 7.78 up 19 on our September contract.   World stocks are rising as well as ours, but breaks are finding buyers on concern our spring wheat crop is not doing as well as thought.   Buy September Minneapolis Exchange spring wheat futures if we close over 8.70.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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