Feed Peas Remain Weak

VANCOUVER - Oct 24/08 - SNS -- International feed pea markets continued to soften during the past week, with European markets losing value in both local currency and U.S. dollar terms.

Along with cheaper feed grain markets, this had a clear impact on feed pea bids seen by farmers in Europe and Canada, with both regions reporting price declines.

Looking at the situation for major grains and oilseeds, Alaron Trading Corporation's Tim Hannagan says hedge funds are still liquidating their large positions in corn, soybeans and wheat. This continues to sideline many end users who are waiting for signs the market has bottomed before entering.

"Foreign demand remains good as expected at harvest time but domestic buying buy ethanol plants and feeders is largely hand to mouth as they see prices still falling. Once the belief that a low is in -- the local U.S. end-users will rush in to buy long term needs on fear of higher prices.

"Only one positive thing occurred this week and that being we made a double bottom low on December corn, equaling last week's low. In the technical world this is a strong support signal on a chart. But when we come in Monday, charts come fourth in the line of importance to trade with stock indexes, crude oil and dollar index in order of importance to determine grains direction on the day."

Looking at the soybean market, Hannagan added, "This week China announced a plan to set up domestic price supports to encourage more production and to build a soy bean reserve. To build this reserve, they would buy domestically and on the world market. Very price supportive once beans get back to trading fundamentals."

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