Alaron Grains and Oilseeds Comment

CHICAGO - Oct 17/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

A quick look at the fundamentals, even though these not driving prices, our crop condition report showed 62% of the crop was in good to excellent condition up 1% from the week prior and 3% under a year ago.   21% is harvested vs. the five year average of 41%.   Farmers continue to harvest beans first and let corn sit in the field to dry.   Beans for cash now always means farmers intend to store corn on the farm for hopefully better prices next year.   Our weekly export sales report showed 975t.m.t. of corn was sold last week up 2% from the week prior and up for the fifth consecutive week.   Clearly as prices have declined demand has risen.   We would be selling the grain either way as harvest attracts users such as feeders and food processors but the value has many wanting to load up.   Nothing was different this than the three prior weeks.   Large index funds continued to liquidate their large long positions in corn, beans and what as they cut risk exposure due to the still deflating economic conditions and unstable trading exchange platforms.   This will continue until the stock economy stops going down.   It is that simple.   Once funds find a comfort zone of positions, they will slowly come back but largely in the back months from March through December 09 corn and March to November beans.   When we come in Monday, we look to outside markets for grain direction in this order of importance.   Crude oil, stock indexes, and the dollar index.   If crude and stocks are selling off and a higher dollar index we will sell the grains.   The reverse, we buy.   December corn has resistance at 4.00.   A close over 4.00 leaves 4.20 next resistances.   Support remains wide between 3.00 and 3.25.   There is no indication large index funds are done selling long corn positions.   So, we come in with a mind set to sell yet, ready to recognize a change quickly as that low can not be far off.  

Our crop condition report was unchanged for the seventh consecutive week at 57% G-E condition with 51% harvested vs. 61 the year prior and five year average.   It is near impossible to have a crop condition unchanged for a month and a half considering weather invariance's, so we might expect that then harvest is complete an eventually lower yield and production.   Our weekly export sales report showed a whopping 1.028 million metric tons of beans were sold last week up 71% from the week prior and up for our third consecutive week.   No surprise here as we are the primary port in the world for freshly harvested beans and of course we are down $3.00 per bushel the last three weeks creating great harvest value.   Demand was not just China in for 189t.m.t. but Egypt, Mexico to Spain.   Demand should remain in our control until mid-January.   Welcome in Monday and look to outside markets for direction.   A continuation of the down trend sets up 7.75 basis November as a near term 10 day out target.   If outside markets support buying we could push to 9.50 quickly.

The crop progress report showed 73% of our winter crop is now planted and equal our five year average.   46% is emerged from the ground.   Remember early emergence before we go dormant in November only benefits the root system and the initial stand.   The head development and yield determination does not come until we break dormancy next March.   The weather is not critical now but to date, adequate moisture has the crop off to a great start.   No problems with this crop so far- the last two hurricanes brought badly needed moisture to Texas, Oklahoma, and Kansas, our key producers.   Our weekly export sales report showed 435t.m.t. of wheat was sold last week off 15% from the week prior.   We need to stay over 500t.m.t. to be friendly but as you know demand is not driving this market but world record stocks and production are the biggest influence.   Like corn and beans, wheat too is ready for a bigger profit taking correction as prices have collapsed.   We had 5.60 as minor resistance today (Friday), but it is 6.00 that needs to be broken to turn bullish or 5.35 will be our next support.

If you are not a full service client at Alaron, and would like to use me as your broker to manage your account; please contact me:   800-563-9510, or email:   thannagan@alaron.com

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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