Alaron Grains and Oilseeds Comment

CHICAGO - Nov 4/08 - SNS -- Following is the grain and oilseed futures comment from Alaron Trading Corp.

Our first report of the week came with our weekly export inspection report showing 17.2 million bushels of corn was inspected by the USDA for near term shipment down from 24.07 the week prior.   This is our four week average of 27.5 and a year ago of 61m.b.   A year ago we had a seemingly healthy economy and importers were aggressive buyers.   Recent index fund liquidation over a failing economy and stock market continues to keep exports on an only as needed basis; but that could change quickly if stocks stabilize.   The crop condition report after the close Monday, showed 64% of the crop is in good to excellent condition, unchanged from the week prior, under a year ago of 65% and equal where we were on August 25^th.   Our crop condition reports remain questionable to their accuracy as weather has been more than variable while crop conditions remain unaffected.   55% of the crop is now harvested vs. 83% a year ago and five year average of 79%.   This week's warm and dry start looks to see a big surge in harvest but clearly growers are waiting as long as possible and look to hold most of this crop on the farm for higher prices later.   We are starting the week on a firm footing for corn, beans and wheat.   Monday's gains were light for corn and beans while wheat posted 25 cent gains on Monday.   Today's action started off strong with all three grains with double digit gains in the first hour as crude oil was up over four dollars, stock indexes up and an sharply lower dollar index.   As I noted on my Friday report, if we start the week stronger, do not expect last week's lows to be tested before the November 10^th crop report as no one wants to be short into it as traders expect another marginal cut in corn and bean production.   Today's election results are not as important as the markets reaction after last week's short covering put in a nice chart bottom for all three grains and has the stock market bulls saying the worst of the index fund selling is now over.   Of course, if stocks fall out of bed making new lows next week; it could be a black hole sucking grains along with it.   We need a close over 4.25 to turn chart friendly and 4.60 to be chart bullish.  

*Just a Note:   I will hold a web session Thursday afternoon at 3:30p Central Time.   If your would like to turn on your computer and listen into my grain market discussion, call:   800-542-1022, before Thursday for your password, I will be answering questions on the market from listeners.

Monday's weekly export inspection report showed 49.3m.b. of beans were inspected for near term export up from 46.5 the week prior, our four week average of 23 and a year ago of 23.6.   Year to date is 193 vs. 196 a year ago.   This is important as corn and wheat inspection are running well behind on the year while beans now look to surpass last year's record export pace.   This in large comes from China's pick up in purchases to build a reserve of soy beans to insure the mandate of more protein in their diet is uninterrupted by production problems.   Crop condition reports are over leaving us with the progress report showing 93% of our crop is now harvested vs. 90 a year ago and five year average of 89%- a non-issue.   The last quarter of this crop looks to have gone almost entirely to storage, hopefully for higher prices next year.   The early harvested bushels went for cash to pay debt due at harvest time.   Everything is set up to be bullish, from recent chart patterns to strong demand.   The only thing we need to continue is having index funds show us there done selling.   This will leave them to begin moving into the 2009 contracts.   Once the election smoke clears, we will see what cards their going to play.   Like corn, beans too look not to test last week's lows now ahead of the November 10^th crop report.   January support is 9.30 and resistance 9.70 then 10.10.

Monday's weekly export inspection report came in at 13.2m.b. Inspected for near term export down from 21.9 the week prior, 29.3 a year ago, and four week average of 21.5.   As I have said for weeks, demand is not driving this market.   It is neutral at best to pricing.   We can not sell more wheat if U.S. prices move higher and yet when we move lower we are still a third port of origin for importers to turn to for wheat.   As long as the world sits on record inventories and another record production projected this coming season, foreign exporters will continue to under bid us to gain their share of exports.   The crop condition report showed 67% of the winter crop is in G-E condition up from 65 the week prior and 53% a year ago.   Needless to say, this crop is off to a great start.   Kansas our number one producer is at 73% G-E and Colorado 76%.   Only big producer behind is Texas at 54%.   Over sold conditions have given us a handsome rally from our October 24^th low of 5.05 to 5.80 at mid-session today.   The 5.80 is a double top from last week.   A close over 5.80 and 6.10 is next.   Support lies at 5.50.   A close under and a test of 5.05 is next.

End.

Tim Hannagan

Alaron Research Team

800.563.9510

thannagan@alaron.com

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