Alaron Grains and Oilseeds Comment

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

First Note:   Markets are closed Monday for our Memorial Day Holiday!

Thursday's weekly export sales report showed 507 t.m.t. of corn was sold last week down 7% from the week prior and 8% under our four week average.   Key Asian sales were 240 t.m.t. vs. 215.   The overall numbers are neutral for corn demand.   Corn planting on our next crop progress report should be at or near 90% complete.   This essentially means weather's impact on planting turns to weather's impact on growing.   Due to fairly cool evenings our emergence have been slow but we look for a measurable increase in emergence the next 12 days on a warmer pattern.   Next chance for rain is next Tuesday and Wednesday in the Midwest.   WXRISK.COM sees 70% coverage of .25 to 2.00 inches with most in the western grain belt.   Two summer forecasts have come out.   One sees a late June heat dome building in the western grain belt of Iowa heading west and very dry conditions from July 1^st through August.   This would hurt about 35% of our feed grains.   The other sees a dry western belt mi-July into August with both seeing the eastern grain belt of Illinois east being normal on moisture to above.   Needless to say, with a historically low ending stocks number for next year, there is no margin for error in the growing season.   A price rally of 2 to 4 dollars could occur quickly as July will be our key month for yield development with our late planting.   We need to continue to look for corrections in pricing to get long December corn and be in position.   Traditionally traders return after Memorial Day and buy corn and beans as we usually have enough planted to start building a weather premium in or a higher price that reflects the uncertainty of the growing season.   Downside risk next week is month end profit taking by funds and especially a sharp daily drop could occur if profit taking comes out of crude oil.   Support on December corn next week is 6.16 then 6.00.

Thursday's weekly export sales report showed 382 t.m.t. of beans were sold last week up 90% from the previous week and 65% over our four week average, thanks to 194 t.m.t. to China.   We expected this number as the Argentine farm strike the two prior weeks had USDA releases last week on the China purchases.   It is a good weekly demand signal but sales to China this week to show up on next week's report are lighter.   Next week, beans look to weather for direction on its planting pace.   Planting this week should have been big and next week's rain event should not slow planters too much.   By the end of next week, we should be 75% or more complete.   Then, weather and its impact on growing takes over.   Like corn, beans too look at very low ending stocks next year making this year's growing season critical to keep from running out.   Any problem in July and august and beans will ex0plode on price rationing.   The Argentine farm strike talks went poorly Thursday leading to a sharp opening rally Friday.   Like corn, beans too seasonally rally after Memorial Day but a month end correction next week if crude oil pulls back could occur.   Use any break as a long term buy basis November futures.   November has support at 13.25 then 13.00.

New crop wheat export sales were 394 t.m.t. vs. 443 the week prior.   Though down, sales are supportive on demand as countries line up for wheat as harvest kicks off next week and through June.   Demand is we4hat's only hope to rebound from the two month break in prices.   After a 50 cent rally off last week low, prices struggled at our 8.04 resistance basis July futures C.B.T.   Technically a close over 8.04 is needed t6o turn chart bullish.   Harvest is beginning next week in Texas where our poorest quality wheat was grown this spring.   June looks to see some of the better wheat surface as custom cutters move north out of Texas and that should see importers surface.   Currently our new crop exports for future shipment are at the fifth highest in history.   With bins empty here and abroad we have to expect demand to fill immediate needs and address tight inventories to continue at near record levels.   It 8is still possible for a late May into June demand driven rally but from what price level.   July K.C. wheat futures have support at 7.60.   Key resistance is 8.25.   C.B.T. July wheat finds support at 7.25 and resistance 8.04.   New crop September Minneapolis spring wheat futures find support at 8.35 with resistance at 9.00   I prefer buying any wheat contract on a close over resistance.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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