Alaron Grains and Oilseeds Comment

CHICAGO - Dec 23/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

HOLIDAY GREETINGS!

We began the week this Monday, with our weekly export inspection report.   Note, this report tells us how much of each grain was asked to be inspected by a commercial grain exporter by the USDA.   All grain has to be inspected and meet the highest grades of standards set forth by the USDA.   The is keeps the U.S. as the world's best port for high quality grain.   It tells us about near term demand from 1 to 10 days out as an exporter only has grain inspected if someone wants to buy it.   Corn's inspection report Monday showed 31 million bushels were inspected unchanged from the week prior, down a year ago of 51 but we were over four week average of 27.5.   Demand still is not wheat we need to get a bull run but enough is changing to post a low.   China's plan to build a corn reserve along with its bean reserve could see first quarter 2009 purchases pull U.S. corn out of the demand hole.   Near term demand remains a question but long term bodes well.   South American weather remains a concern.   Where it is wet in Argentina and Brazil, it is too wet and where it is dry, it is too dry.   The next 7 days look much of the same, lending support.   Here in the U.S. record upper Midwest snows and sub-zero temperatures have grain locked up on the farm, having cash prices firm supporting futures.   Some farmers will sell some grain after January 1^st, to divert taxes but most intend to hold until just before spring planting begins.   Corn and beans seasonally see strength before and after Christmas.   3.80 support for March corn needs to hold or 3.70 is next.   We need a close over the 4.00 resistance to move to next resistance of 4.16.

Monday's weekly export inspection report showed 27.8 were inspected down from 29 a year ago, 35 last week and four week average of 36.7.   It is clear that the recent demand explosion and price surge have importers backing off a little.   Note, Christmas week closings always see a slow down in commitments.   The U.S. soybean crush to gain the meal and oil for November came in at 144 m.b. vs. 150 the month prior.   Meal and oil stocks were up showing a slight domestic usage slowdown.   December usually sees a slowdown in the crush as plants close due to mandatory cleaning before kicking back up in January.   The December closings will end up shrinking meal and oil stocks due to the drop in crushing.   Quiet day today but beans have a history of a pre Christmas rally.   Strength continues to come from very hot and dry weather in Southern Brazil and light farmer selling of beans by U.S. farmers.   As sub zero temperatures have them next to the fire, while demand in the big picture remains robust.   January futures find support at 8.70 and March at 8.80.   Both have resistance at 9.00.   A close over 9.00 and next resistance is 9.50 then 9.80 basis January.      

Monday's weekly export inspection report showed 9.7 m.b. inspected down from the week prior of 12.4, four week average 16.5 and a year ago 19.1 m.b.   Holiday government closings have importers booking only as needed.   Today saw weakness as export business on the world market looks to be on foreign ports leaving the U.S. out.   Additionally, a break in the western plains wheat states weather has the worst of winter wheat kill fears behind us.   This all had recent long pull profits today.   Wheat's strength recently comes from thinking that all the bad news is in and all the positive news awaits.   The positive news largely comes after March first when wheat breaks dormancy and world trade turns to the U.S. to fill needs for May on out delivery.   With world wheat quality down and the U.S. winter crop set up to be a unusually high quality crop, as long as winter kill threats are over, the U.S. looks to buy a primary port of origin for high quality milling wheat.   Near term wheat remains the tail of the dog to corn and beans following behind.   Strong March support lies at 5.35 with resistance at 5.80 then 6.10.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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