Alaron Grains and Oilseeds Comment

CHICAGO - Jun 9/09 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

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Our first report of the week came with our 10:00a Weekly Export Inspection Report on Monday showing 25.9 million bushels of corn was inspected to be shipped near term.   This was off from 33 m.b. the week prior, 39 a year ago and four week average of 34 m.b.   We need to stay over 30 m.b. weekly to remain supportive for pricing on demand.   The week of a major grain report such as we have on Wednesday- We tend to see softer exports as importers await report numbers to see if they need to adjust their marketing plan but exports overall have softened the last three weeks as prices hit new highs and with talk of China planning to sell some of their reserves that could end up going surrounding Asian neighbors who are customers of ours cutting exports further.   On the other hand, China could sell to their own domestic users as we have seen this year.   After the close our Crop Progress Report came out showing 97% of the corn crop is now planted leaving 2 m.a. yet to be seeded.   It will get in even though a little late.   Wednesday's USDA Crop Report out at 7:30a Central Time has traders looking at ending stocks for direction.   The average pre-report trade guess for this year's ending stocks is 1.607 billion bushels up 7 m.b. from last month.   The range is from 1.550 to 1.704.   Whether a little over or under the average is not important as supplies are ample.   It is next year's ending stocks that lend concern.   Last month's number came in at 1.145 b.b.   The average pre-report guess is 1.071 with a range of 731 m.b. to 1.458.   If we come in at the average guess we open higher then profit taking off the high.   If it is at or near the low end of the range, we open higher and close strongly up on the day.   Come Thursday, they will forget the report and go back to trading outside market influence from Crude Oil, Dollar Index and the Dow.  

The big question is:   Will we see a post report correction well over due?   Let's see what the report says first.    Remain long term bullish but near term nervous.

Monday's Weekly Export Inspection Report showed 7.9 m.b. of beans were inspected for near term export, down from 9.4 the week prior, 12.2 on our four week average and over a weak 4.7 m.b. a hear ago.   The key here was China was absent from the mix.   This further suggests what rumors and reports the last what rumors and reports the last two weeks have shown that China is backing away from recent large and aggressive buying.   It is temporary but there so be patient on demand.   The Crop Progress Report after the close showed 78% of the crop is planted up 2% from a year ago and under our five year average of 87%.   Key lagers are:   Illinois and Missouri at 59% and Indiana 69%.   Like corn- the late planting lends support but they will get it all in and then let the growing season weather decide if the late planting dates matter.   Wednesday's Crop Report is expected to cut ending stocks across the board.   For this year the average pre-report trade guess is 114 million bushels down from 130 last month with a range of 99 to 130.   Next year's ending stocks are pegged at 211 m.b. with a range of 140 to 376.   Needless to say, if the numbers come in at the high end of guesses we open lower.   At the low end or under, we open sharply higher and stay there.   If we come in at or lightly over the average guess we open at the high of the day whether up 2 or 10 cents, then profit taking.   Long term into late July and August we will get our weather premium highs for the year but watch out for a post report correction as we are over due.   Do not forget the Old Report Day saying:   'Anything Can Happen and Usually Does Twice'.

Monday's Weekly Export Inspection Report showed 17.4 m.b. of wheat was inspected for near term export up from 10.3 the week prior, our four week average of 13.5 but under a year ago of 19.4.   Do not get excited it is just early harvest purchases by Asian customers less concerned about quality but quantity at value.   Demand will improve as harvest progresses in the weeks ahead but not enough to drive prices.   Wednesday's report for wheat looks to show just marginal adjustments.   The Ending Stocks for our New Crop Wheat are guessed at 606 m.b. vs. 637 last month.   Though down, it is still on huge number.   They will release Winter Wheat Production Numbers again but only slight cuts are expected leaving wheat to follow corn and beans.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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