Alaron Grains and Oilseeds Comment

CHICAGO - Oct 14/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

First reports of the week came with our weekly export inspection report showing 29.1 million bushels of corn was inspected by the USDA for near term shipment, down from 36.2 the week prior; 44 a year ago, and four week average of 33.2.   All the numbers uncut the demand picture for this week and it appears Friday's crop report sent a message that larger production and ending stocks estimates could bring lower cash prices yet to be had by importers.   The problem is the prices on the futures remain solely charged by the economy driven markets like crude oil, dollar index and stock indexes.   Overnight electronic and day session trends are still controlled by these outside markets.   Large index funds and large agricultural funds sold over 40 thousand contracts of their long positions last week as fear over the economic collapse steered trading.   Monday's recovery seemed to be all short covering for profit but no new longs.   Today left more questions than answers with outside markets trading both sides of unchanged into mid-session.   Unless a sizeable improvement occurs this week in stocks indexes, grains look to remain weak.   December corn needs a close over 4.40 to turn bullish and a close under 4.00 sets up 3.25 as next stop.

Tuesday's export inspection report showed 13.2m.b. of beans were inspected for near term export, unchanged from the week prior, over our four week average of 7 but well under a year ago of 37.7.   Not great- not bad- but good.   As we are the sole part of origin in the world to buy beans from, we have to expect demand to remain decent through January at which point forward contracting turns to South America.   The crop progress report tonight is expected to show half or more of our beans are harvested. The farmers are attacking beans to get cash sales and are pretty much letting corn sit out there and save drying costs as intent is to hold corn for later sales.   Same trading strategy, come in each day and look at in this order of importance.   Stock indexes Dow and S&P.   Crude oil then dollar indexes.   If crude and stocks down and dollar index up-Sell grains- The reverse buy.   Agricultural fundamentals are on hold for the near term until the economic fear leaves index funds trading.   November beans need a close over 9.40 to set up a test of 10.00.   A close under 9.00 and 7.25 could be the last stop this fall.

Tuesday's weekly export inspection report showed 22m.b. were inspected for near term export, off from 31.0 the week prior, 35 a year ago, and our four week average of 24m.b.   Numbers were off but they are not bearish, they are neutral.   Because all our export competitors are loaded with huge inventories we have to compete with price to get our share of exports.   This leaves demand as a neutral driving force.   Rains over the hard red winter wheat states in the western plains remain good for early emergence but are slowing planting a bit.   Good rains are falling today over Texas, Oklahoma, and Kansas.   No problems with the crop.   Unless an economic turnaround pulls everything up, wheat remains in a downtrend.   December has resistance at 6.10.   We need a close over here to be a near term buyer for a move to 6.25 which is major resistance.   A close over 6.25 and charts turn bullish.   Stay short until resistance is broken.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the author(s) that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Alaron Trading Corp. its officers, directors, employees and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. and/or STAT Publishing or its staff and/or management.