Alaron Grains and Oilseeds Comment

CHICAGO - Ma09 8/09 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

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Thursday's Weekly Export Sales Report showed 588t.m.t. of corn was sold last week down 52% from the week prior and 46% under our four week average.   Key Asian sales that account for over 70% of our exportable feed grains annually were only 116t.m.t. vs. the five prior weeks of 593, 432, 354, 688 and 840t.m.t.   I called for a weak number this week as we felt Asian market importers would take a step back until they gauged the impact of the Swine Flu on the market.   It appears exports this week to show up on next Thursday's report will be a little better as Swine Flu scares have subsided.   We have to expect a little of a slow down but what we do not want to hear is a country temporarily closing their ports until they figure out how to inspect incoming ships for the virus.   I said on last Friday's report "to expect an up week this week as the bullish expectations over next Tuesday's USDA Crop Report would offset any weather or Swine Flu concerns".   Clearly traders would rather be long than short into the report as pre-report trade guesses all have a lower ending stocks number over last month's report due to a strong April demand pace and lower South American production to compete against us.   When we come in Monday, if the weather outlook is to be drier especially in the Eastern Corn Belt and the crop report comes out bullish, we should get higher trade off the report on Tuesday to 4.28; but not higher than 4.38.   You should take profits on this rally basis July Futures as we would have priced in the planting delays and over 80% of the increase in demand due to South American Crop's problems creating more demand here.   The pull back would be healthy and allow us to get re-positioned long for the second leg of the Bull Market, our summer growing season weather premium rally.

Thursday's Weekly Export Sales Report showed 654t.m.t. of beans were sold last week off 22% from the week prior and 3% under our four week average.   Key world buyer China was in for 197t.m.t. vs. 486 the week prior.   Like corn- beans too saw a pull back off the Swine Flu scare.   It was not as big a percentage from the week prior, as corn was and this was because bean ending stocks are very low compared to corn.     This is as Asian protein needs are great.  This week was just as we called for and that being more long position buying and short covering to get ready for the Tuesday's 7:30a USDA Report.   I see beans next week similar to corn.   If Monday's six to ten day forecast comes in generally drier allowing planting for beans to take off and Tuesday's Crop Report comes in bullish and bullish would be a 35 to 55 million bushel cut in ending stocks.   We should get a spike rally at which point I will take profits and look for a price correction to get long for the summer growing season rally.   The reason a fair and reasonable profit taking rally should occur is on two fronts.   One- if the planting window opens... psychology will be beans planted acres will come in greater than what the March 31^st Planted Acreage Report suggested.   Two- with over 80% of South American beans harvested we should with Tuesday's ending stocks drop priced in almost all of the increase in demand in U.S. Ports due to their problem.   Support on July is 10.80 then 10.30.   Resistance is 11.22 then 11.50.

Thursday's Weekly Export Sales Report came in at 254t.m.t. vs. 142 the week prior; both numbers are bearish in demand terms.   Demand remains a non-driving force to prices until harvest begins.   We have seen funds getting out of short positions the last two weeks largely on the thinking there is no more new bearish news and certainly demand will pick up into our June Harvest even if only a little due to poor quality.   Additionally this week's Kansas Crop Tour came in with lower yield expectations over a year ago and with only 3% of the crops head developed it will be a little longer before we find out if the early April freeze damaged the crop.   The trade believes damage will surface and this makes shorts in the market nervous.   In Tuesday's report the endings stocks numbers should see little change and have no impact on prices.   It is the Winter Wheat Crop Production Numbers that are expected lower.   Traders expect small cuts in production as it is early yet in the production cycle.   The June report will be the big one.   Two weeks ago, we said get ready for a move in May to 5.84 basis July Futures.   We made that goal today.   Hope for a pull back to 5.60 to 5.50 areas to buy.   Further crop condition's problems are sure to arise out of Kansas as well as a good chance fewer Spring Wheat acres will be seeded.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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