Alaron Grains and Oilseeds Comment

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

Thursday's weekly export sales report was released today one day later due to Tuesday's government holiday.   It showed 355t.m.t. of corn was sold last week, down 25% from the week prior and 46% under our four week average.   Our primary customers out of Asia were in for 260t.m.t. vs. the three weeks of 300, 320 and 305t.m.t.   It is normal to have a down week the week of a USDA crop report such as last Monday as importers await numbers on production to get a better marketing mindset but other issues are equally at fault.   Feed lot populations with cattle are lower with chicken numbers down almost 10%.   This all has demand behind a year ago.   Feed use will not change near term into early 2009 but what can are imports.   Importers have 8.00 corn prices from June fresh in their minds and any turn up technically signaling a bottom and a rush of demand will surface to lock in value incase prices turn sharply higher.   There are small feeders and ethanol produces who put out of business when they panic bought corn supplies over 7.00 on fear it could go to $10. And wished they bought before the run up.   Next week is an interesting week.   If we are going to close under our support of 3.50 on December corn and push to next support of 3.25 which would be a dream price to go long.   We would have to do it next week or not at all.   As the week after is the last week of the month and a shortened holiday week due to thanksgiving and traders fat with short position profits surely will buy back positions to show month end profits on their books while speculators never leave their trades on the table on short trading weeks.   We have seen corn's short selling reduced sharply this week with profit taking on breaks rather than the follow through selling we saw the weeks prior.   It comes down to be ready for a directional change.   If December corn closes fewer than 3.50 look for 3.25 to 3.15 areas to be hit.   Be an aggressive buyer.   A close over 3.90 and be a conservative buyer, as that breaks minor resistance sending chart outlooks to test major resistance at 4.25.   Be ready for one or the other.

Today's weekly export sales report showed 478t.m.t. of beans were sold last week down 47% from the week prior and 53% below our four week average.   Key world buyer China was in for 207t.m.t. vs. the two weeks prior of 642 and 788t.m.t. Though these numbers are down, they remain good demand numbers as they are skewed by the prior monster purchases by China.   After China announced an initiative to build a large soy bean reserve to insure a high protein diet for its populace, it had to show it's serious so those purchases sent that message.   Now we are back to what is considered more normal weekly sales numbers.   Demand looks to remain good through January when China will get a clearer picture on how South American crops are going.   Like corn- beans too have one week left to make exhaustion low before month end and holiday profit taking sets in.   We have very minor support points on January beans at 8.60 and 8.40 but our dream price is 8.10.   If 8.10 are hit we are going to be an aggressive buyer next week.   If not realized and a close over 9.10 occurs first, we will be a conservative buyer to start as 9.70 is next major resistance.   Be ready for both.

Friday's weekly export sales report showed 248t.m.t. of wheat was sold last week down 32% from the week prior and 40% under the four week average.   No surprise as we know record world supplies leaves as a third port to turn to for wheat value.   Wheat's story this week was more technical than fundamental.   The December wheat contract built wheat is called a head and shoulder formation.   When this formation forms at the top of a bull market upward run in prices, it will break down 90% of the time as the right shoulder finishes developing.   Because this head and shoulders developed at the bottom of a three month, 4.50 cent decline the opposite was expected.   It is very rare to see a head and shoulders on a severe break.   You always see a spike low and key reversal close, and then rally.   For those rare head and shoulder price break patterns they to break to the upside 90% of the time.   5.00 is the season's price low for the left and right shoulder.   Tuesday and Wednesday, we hit lows of 5.06 and 5.07 before sharp short covering and buying occurred.   The question now is, does this signal the year's low is in?   Well technically it does.   However, we now need a close next week over the top of the head of seal in the low and that price is 5.85.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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