Weakness on World Feed Pea Market

VANCOUVER - Oct 31/08 - SNS -- International feed pea markets remained weak during the past week, with European markets posting solid decline sin local curency terms in both grower and inter-dealer markets.

Looking at the situation for major grains and oilseeds, Alaron Trading Corporation's Tim Hannagan says weakness on world export markets has had a negative psychological affect on demand, with buyers holding off purchases until prices show signs of bottoming.

"Thursday's weekly export sales report showed 413,000 MT of corn was sold last week off 48% from the week prior and 50% under our four week average. Asian sales were weak at 320,000 MT as they must have felt last week's price decline was a signal to them to hold off on purchases as lower prices maybe coming. This week's short covering rally should have them back in giving us better sales on next week's report. No concern here as lower prices always find more buyers.

"Tuesday's surprise revision by the USDA on the October crop report lowering production by 167 million bushels to 12.033 and ending stocks by 66 million bushels to 1.088 billion bushels (is) just more bullish long term fuel into corn's picture. The trade will expect our November report to give further cuts as harvest talk has been coming in with disappointing results.

"Grains have yet to separate from outside markets influence and trade its own fundamentals. When we come in next week there are two scenarios that can occur.

"One: Stocks and crude continue down and the dollar index up, pulling grains down early week before short covering late week ahead of the November 10th USDA monthly crop report. After the USDA lowered corn and bean production this past Tuesday on a revision of the October 10th crop report, traders will be nervous about being short ahead of the report on fear they will lower production and ending stocks again.

"Two: Stocks and crude start the week stronger and a weaker dollar index pulls more short covering in grains pulling us up into Tuesday. At this point, you can expect this week's grain lows for the month to hold as traders will not go short on a rally until the November 10th crop report comes out. That report is out two hours prior to the grain opening that Monday so positioning ahead of it has to be before Friday's close."

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