Alaron Grains and Oilseeds Comment

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

Thursday's weekly export sales report showed 568 t.m.t. of corn was sold last week up 4% from the week prior.   The key Asian sales were 330 t.m.t. vs. the two prior weeks of 253 and 204.   Considering how disastrous the economic psychology was last week, sales were good and key Asian customers were active.   Next Friday is our USDA monthly crop report.   Private forecasters are coming out now with one looking for a 48 million bushel drop from the September report of the USDA and 133 m.b. drop from their own.   A poll off the 20 major brokerage houses will happen Monday and their average guess will be posted Tuesday to get an idea of what the trade expects.   Here is some thoughts:   Since the Monday crop condition reports for the month of September added up to only a 1% decline in the good to excellent condition.   We have to think the USDA will leave production and yields unchanged and do to the quarterly stocks report showing an increase in stocks on hand as of September 1.   We have to assume they would add that to corn's ending stocks increasing them slightly.   That is what the government's own monthly numbers expect to see.   We are discussing supply demand fundamentals because a bail out bill for our economy takes us back to business and grains will eventually begin trading their own fundamentals.   The last several weeks have been index funds selling their long positions as the platform their trading on which is our economy and exchanges are in trouble.   We have a rally coming from this break but from what level is still uncertain until this economic concern stabilizes.

Thursday's weekly export sales report showed 471 t.m.t. of beans were sold last week, down 23% from the week prior but the week prior was huge number.   Key here was that China was in for 318 t.m.t. and showing us for the second consecutive week they are turning to the U.S. to buy beans now which is seasonal to about January 20^th.   This is when they start buying South American crops again.   Beans see next week's crop report October 10^th, just like corn.   The September crop condition number was 57% G-E condition all month.   That leaves the government to leave production and yields unchanged.   However, a private forecaster has already estimated production off 45 m.b. from the USDA September Report.   The jump in the quarterly stocks on hand report last Monday suggest a jump in ending stocks.   I do not think traders will want to be short into the report, but we might not see long pile in either.   Regardless of the fundamentals the bail out bill of our economy is the key pricing source in the immediate near term.  

Thursday's weekly export sales report showed 651 t.m.t. of wheat was sold last week.   This was up from 284 tm.t. the week prior and 42% over our four week average.   Same old, same old.   Good weeks followed by a bad week then a good week again.   Demand will not drive the market as focus is on our good winter wheat planting weather and ample supplies.   Funds continue to add to short positions.   Wheat is limited to short covering on breaks and a knee jerk reaction to a bill passage on the bail out possibly back to 6.80 to 7.10 best scenario basis December C.B.T. futures.   Sell strength and look for the next drop to hit 5.90 to 6.00 before mid-October.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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