Alaron Grains and Oilseeds Comment

CHICAGO - Oct 28/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Monday's first report came with our weekly export inspection report showing 21.2 million bushels of corn was inspected for near term export down from 29.9 the week prior, our four week average of 32.2 and a year ago of 45.8m.b.   Not a good near term demand signal for this week especially after a lower close on the week last week.   Now that could be a problem- that importers can and are willing to wait for lower prices to load up on longer term needs and only buying near term needs.   That will change quickly once perception a low has been found.   The crop progress report after the close Monday put corn at 64% in good to excellent condition up 2% from the week prior; and equals our August 25^th report.   The last nine weeks have been between 59% and 64 with five weeks at 61%.   The weekly crop condition reports have been very suspect as to their accuracy.   39% is now harvested vs. 66% on our five year average.   Look for the harvest pace to pick up after November 1^st; but do not expect heavy farmer sales as they will hold the lions share of this on the farm until higher prices are seen later.   The USDA threw the market a curve ball Tuesday.   After the closer Monday, they announced they would release a revision of the October 10^th monthly crop production report.   All three grains rallied over night as the trade had anticipated an eventual downward revision in corn and bean production even though the government weekly crop condition reports showed no real changes in the crops since late August.   Ahead of the opening for corn they cut production to 12.033 billion bushels from the October 10^th report of 12.200.   Yield dropped to 153.9 from 140 bushels per acre and reduced ending stocks to 1.008b.b. from 1.154.   Planted acres were cut from 86.9 to 85.9 million acres.   The lower acres were from spring flooding and yield cuts from hurricane rains in the southern delta.   The question to be resolved from today on is- will these now separate grains from outside market influence?   Initially my thinking is no, but the rest of this week will tell.   Until the grains show me their now independent in their thinking, I will continue to sell if stocks and crude are down and buy if up.   Come in Wednesday with an open mind neither bullish or bearish and use outside markets as an initial guide to corn and bean direction and see what grains tell us at days end if they are going to trade on their own thoughts or not.

Monday's weekly export inspection report showed 41.3m.b. of beans were inspected for near term export, up from 27.8 the week prior, our four week average of 15, and over a year ago of 34m.b.   You already know the story…WE are the only port in the world to buy freshly harvested beans through next March when South American beans come online and China is increasing bean imports.   Demand remains in a seasonally robust pace.   The crop progress report put 76% of our crop now harvested with crop condition reports over for the season.   Ahead of Tuesday's open the USDA dropped soybean production to 2.938b.b. down from 2.983b.b. on October 10^th.   They left yields unchanged and lowered planted acres by 1.1m.a. and ending stocks to 204m.b. from 220.   Okay, like corn, beans too rallied on the open sharply before fading.   These crop production and ending stocks for corn and beans will be bullish for pricing once the outside influence ends.   Stay close in touch as the bottom can not be far off if not already in.

Monday's weekly export inspection report showed 21.8m.b. of wheat was inspected for near term export up from 18.7 the week prior, equal our four week average, but under a year ago of 31.8.   Not bullish, not bearish, but neutral.   It is a non-pricing number.   Monday's crop progress report put 84% of the winter wheat crop now planted with 69% emerged from the ground.   Our first crop condition report of the year came out about as expected looking very good at 65% G-E condition vs. 55% at the end of last year up 10%.   Key producers doing better were Oklahoma 68%, Kansas 72%, and Colorado 77%.   G-E and under was Texas at 52%.   On the surface it is bearish but keep in mind this is a rating at wheat's earliest stage of development, before it goes dormant in late November.   Yields are determined in April and May, after March sees dormancy break and the crop greens up ahead of head development in April.   The USDA made no adjustments in wheat production so a higher 16 cent open in sympathy with higher corn and beans was quickly sold with the market down 10 cents at mid-session.   Wheat remains supply side bearish.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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