Alaron Grains and Oilseeds Comment

CHICAGO - Ma09 5/09 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

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Monday's first report came with the Weekly Export Inspection Report showing 30.1 million bushels of corn was inspected by the USDA for near term shipment.   This was down from 34.2 the week prior, 35 a year ago and four week average of 36 m.b.   Well we are under all our comparisons but to such a small amount I can see it as a negative.   One would have thought the Swine Flu scare would have demand a little slower.   It is clear that the importers are a 'wait and see' attitude now and until a case of the virus shows up by ship, they will remain fairly aggressive grain buyers.   After the close, the Crop Progress Report at 3p Central Time was released showing 33% of our corn crop is now planted up from 22 last week 24 a year ago and under the five year average of 50%.   Furthest behind is the Eastern Grain Belt with IL 5% planted vs. 66 on the five year average.   IN 5 vs. 47 and OH 13 vs. 46.   Ahead of normal is the Western Grain Belt with IA at 60% vs. 53.   NE 57 vs. 42 and MN 59 vs. 47.   The Western Grain Belt always plants first and eastern last, but the IL and IN pace is somewhat alarming to the trade.   Truth is told- they will get it in before it is too late but wet top and subsoil will get it off to a great start going into early June.   Combines have been running non-stop where they can since last week with no rain over the week end and through today so next Monday's report will show a sharp jump in some areas.   The next rain system is Tuesday night through Wednesday with the Western Corn Belt and Midwest with .25 to 1.00 inch over 50% coverage.   Most of the moisture is in the Southern growing regions.   Then the Midwest could get a much larger rain system Saturday and Sunday.   This week overall will allow a better planting pace vs. the last two weeks but we will still stay behind the five year pace.   This should keep a floor under corn prices as well as some strength late week as traders anticipate the May 12^th USDA Crop Report and a lower ending stocks number.   July corn has support at about 3.92 or an about 50% retracement of last week's rally.   We should not trade over 4.18.

Monday's Weekly Export Inspection Report showed 18.1 m.b. of beans were inspected for near term export, up from a Swine Flu inspired weak 8.2 last week.   We were also over the year prior of 14.9 and four week average of 14.7.   We seem to have gotten over the Swine Flu scare or as I noted in 'Corn'.    They maybe in a 'wait and see' mood;  then wait for  a shipping port problem over the virus before panicking.   The Crop Progress Report after the close on Monday showed 6% of the crop is now planted vs. three last week, five a year ago, and five year average of 11%.   No one is far ahead or behind and with all of May into June 10^th to plant there is little planting concern.   If we are well behind after May 20^th, it is a problem but not as of yet.   The strength in beans continues to come not from weather, but supply demand side issues.   We have strong demand on the year with Asian Markets loading up on high protein vegetable crops while South American producers fall short of production estimates this year all setting potentially a very bullish report next Tuesday.   Ending stocks are low and with the uncertainty of this year's growing season, traders continue to price in coverage and protection from a drought.   July beans had support entering today at 10.95.   A close under here sets up next support at 10.30.   Resistance is 11.10 then 11.20 with long term resistance at 12.25 to 12.50.   We will not trade below 10.30 this week, but we might have limited upside movement to not higher than 11.50.   To trade through 11.50 we would need pre-report trade estimates to be released this week show an average ending stocks estimate of 120 million bushels or less.   They should be out by Thursday.

Monday's Weekly Export Inspections was a non-issue with a weak 10.2 m.b. inspected for near term export, down from 13.4 the week prior and four week average of 15.5.   Demand awaits harvest late in May and June to see if quality levels rise to levels that attract importers to the U.S. Ports.   Speaking of the quality levels- Monday's Crop Condition Report for our Winter Wheat Crop came in at 47% in good to excellent condition up 2% from the week prior, but the poor to very poor category was 27% unchanged on the week.   The problem here is good wheat got better from last week's rain but the bad wheat hit by the early April freeze did not move and may not now.   Number one wheat producing state of Kansas still has only 3% of its head developed.   This is a very slow development as two weeks ago we were at 1%.   Many believe that when the head's develop, freeze damage will show up.   Stay tuned.   The Spring Wheat Progress Report showed a dismal 23% planted vs. 55 last year.   ND is at 3% vs. the five year average of 51%.   The weather in the Upper Plains has been dry since last Wednesday and largely dry through Sunday.   This will dry out saturated fields and allow some improvement in seeding but we will stay under the five year average this week.   The Progress and Condition Reports are largely supportive.   We saw funds liquidate a large portion of their short position last week, but we are not seeing them build a long position.   We need a close over 5.57 to look chart friendly.   Support is 5.44 basis July Futures.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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