Alaron Grains and Oilseeds Comment

CHICAGO - Sep 19/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Thursday's weekly export sales report showed 325 t.m.t. of corn was sold last week vs. 376 the week prior with Asia in for 204 t.m.t. up from 102 the prior week.   Not a good demand signal but explainable.   For one, we had one less export day last week due to Friday's big crop report and our key Asian buyers were not as active as they await surety that pre-harvest low prices are in.   The demand looks to be its strongest in October when harvest gets underway in major producing states.   Last week I said look for our Friday crop report to come in with small cuts in corn production, yield and ending stocks giving us a higher open.   That happed with production cut 216 m.b. to 112.072 b.b. our yield at 152.3 b.p.a. vs. 153.3 and ending stocks dropped 115 m.b.   All these numbers were marginal changes at best, but I do expect lower numbers on to October report.   I also said unless Hurricane Ike wipes out oil rigs, grains would have another leg down this week possibly as low as 5.15.   We dropped from a higher close last Friday, of 5.60 to a 5.20 low or 5 cents from our call.   Now what does next week have in store?   Until harvest begins October 1^st, grains continue to follow outside markets.   Unless something enters that is not there now we have a chance for one more leg down before we turn up for an October harvest rally and short covering ahead of our October 10^th USDA crop report which should be expected to be friendly.   There negative news is weather looks dry and warmer allowing corn to mature faster.   Large index funds have not shown us their done liquidating their massive long holdings yet.   Worse case scenario is December corn seeing 5.05 to 5.15 next week.   If seen, buy aggressively.   Here is the friendly side that is equally as possible is the U.S. government has taken action to curb the negative influence on stock indexes and funds may decide to temporarily stop their broad based selling.   We will know by Monday and Tuesday if that is the case.   Either our 5.05 to 5.15 lows will be hit or this week's low will hold through harvest.   We need a close over 5.55 Monday basis December corn to turn bullish on the charts.   Buy on a close over or at 5.15 on a break.   Next week we will begin to buy our long term may call spreads that have been so successful the last two years.   This year's spring planting fundamental concerns are the stronger of the two prior years.  

If you do not have a full service broker here at Alaron and would like to use me as your broker:

Please call 800-563-9510 or e-mail at thannagan@alaron.com  

Thursday's weekly export sales report was surprisingly good thanks to China coming in for 114 t.m.t. with our weekly total of 411 t.m.t. vs. 459 the week prior.   With a crop report last week cutting into our export days we could have been lower.   Now that South American sales are seasonally winding down, the U.S. looks to become the primary port of origin for beans in the world from October 1^st to January 15^th, when foreign importers turn back to Brazil for March to May delivery of beans.   Like corn, beans too met my projection this week of pushing to 11.25 after closing over 12.00 basis November last Friday.   Worse case scenario for next week if we closed under 11.25, is 10.45.   If hit, we will be aggressive buyers but that can only happen Monday through Wednesday.   If not hit, then the government action to stabilize the economy will keep further fund selling from happening near term setting up beans for a move back to 12.35 in October.   The start to the week Monday, buy crude oil the dollar index and security will tell us what comes first, the break or the buy.   Get ready for our May call spread recommendations next week.

Thursday's weekly export sales report came out a robust 657 t.m.t. up 44% from the week prior and 21% over our four week average- A very good demand signal.   Last week, Thursday ahead of our Friday's crop report, I had said look for weakness this week to pull us down to support of 6.80.   We hit it right on Tuesday and Wednesday.   Nothing has changed technically other than support is five cents lower at 6.75.   We need a close over 7.30 to turn chart friendly.   Wheat is in a gray area.   Our U.S. harvest is over.   Recent rains in Texas north to Kansas set up soil moisture very well for early emergence of our winter wheat crop now being planted.   I can buy support with a tight stop but I would much rather buy if resistance is broken on the upside as fundamentals remain negative.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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