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Alaron Grains and Oilseeds Comment

CHICAGO - Sep 16/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.


Corn:

Monday's weekly export inspection report showed 27.4 million bushels of corn was inspected for near term export.   This is up from 22.1 the week prior, equal our four week average and under a year ago of 35.3.   Looking at it closely the better on week number came as last week's government crop report is behind us and end users are coming back in to fill immediate needs after holding back last week awaiting report numbers for marketing direction.   The weekly number being under a year ago comes as harvest supplies are late this year due to late planting.   Last year this time harvest was underway with buyers aggressively buying.   I see it as a friendly demand signal.   Monday's crop condition report showed 61% of the crop is in good to excellent condition unchanged for the second consecutive week; with a 19% fully mature vs. 58% a year ago.   The USDA can not figure out the condition of the crop due to the wide invariance of weather across the Midwest.   WXRISK.COM the weather site sees a fairly dry period through the week with Midwest temperatures warming up.   This will help the crop mature and keep any threat of a damaging frost away for at least the next 7 to 10 days.   Friday's USDA crop report came in about as expected with small declines vs. the August report.   They cut yields 1 bushel per acre due to a dry August, took 216 m.b. off production from the August report and cut ending to 1,018 b.b. vs. 1.133 in August.   It was a friendly report that is bullish long term just not near term.   We look for another marginal cut in production on our October report as the September Midwest flooding due to Hurricane Ike surely curtailed development while the first 14 days of the month saw unusually cool evenings.   A harvest rally awaits but when will Midwest harvesting make it available.   The remainder of September leaves early harvesting limited to small producing states in the South-East.   Big Midwest producers are on target to harvest in earnest on or about October 1st and beyond.   December corn has minor support at 5.30.   A close under here and a test of our August 5.05 low could occur.   We need a close over 5.70 to turn bullish on the charts.

 


Beans:

Our weekly export inspection report showed 7.2 m.b. of beans were inspected for near term export; up from 2.8 the week prior, four week average of 5.2.   However, like corn, beans too see improved demand now that last week's crop report is behind us but not as strong vs. last year as harvest is in October this year vs. beginning in September last year- due to late plantings.   Demand will increase as harvest begins in the Midwest as end users gather grain at a discount to our summer high prices as a hedge against growing or planting problems again next year as ending stocks inventories remain low.   The crop condition report showed 57% of the crop in G-E condition unchanged for the second consecutive week, with 21% dropping its leaves vs. 48% a year ago showing maturity far behind from 2007.   The USDA due to lack of staff and funding is putting less and less effort into these weekly crop condition reports and putting their efforts into the monthly report.   Friday's crop report was as expected with small cuts from the August report with production off 38 m.b. from August 12th.   The ending stocks unchanged at 135 m.b.   The long term bullish, near term nothing.   Like corn, beans too look for a harvest rally as commercial end users rush in and buy a badly needed crop at a 4.75 cent discount to our June highs and a hedge buy against crop problems next year as ending stocks are extremely low.   November entered this week with 11.70 as minor support then 11.25 a strong point of support.   They hit 11.25 Monday and rallied to 11.80 before the close only to test it again today as crude, metals and stock indexes were down hard.   Next support under 11.25 is 10.45.   Resistance is 12.00 then 12.30.

 


Wheat:

Monday's weekly export inspection number showed 19 m.b. were inspected for near term export down from 24.4 the week prior, our four week average of 28.5 and a year ago 30.8.   It is not as bad as it looks as our winter and spring wheat crops are harvested and the mad rush for crop is curbing back to our seasonal hand to mouth buying.   The last 30 days we were the primary port of origin for freshly harvested wheat but now we are part of the world order of exporters and price by comparison to our export competitors determines our demand.   In the big picture of things, the weekly number is pretty decent.   The crop progress report put planting of our new winter crop around 10% planted.   Once we are 35% planted, weather will become a added pricing force.   Note:   our winter crop is planted through early October, grows into mid-November then lies dormant until March.   April it greens up an early stage with head development, and yields determined into the end of May.   Friday's USDA crop report had no production numbers and left ending stocks unchanged at a whopping 574 m.b.   December wheat continues to find major support at 6.75 with resistance 7.65.

 

End.

 


Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com



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