WEEKLY GRAIN UPDATE

For week ending March 28, 2008

by

LYNN SMITH

Senior Futures Broker

ZANER GROUP

800-470-1406

lsmith@zaner.com

SOYBEANS

On Monday, March 24^th, 2008, May Beans spurted higher and closed up the 50 cent limit at 12.57, on short covering and bargain hunting after last weeks sharp sell off.  Higher prices in the Asian markets overnight encouraged bulls early and rumors of China switching purchases from Argentina to U.S. Beans also accelerated the move higher.  Traders focused on the much anticipated USDA planting intentions report to be released prior to the open next Monday, March 31^st, and their thoughts that the increase in Soybean acreage will not be sufficient to replenish supplies in light of the strong world demand.  During the session, the USDA reported Bean export inspections totaled 26.2 million bushels vs. 23.9 m.b. last week.  The reports were above analysts expectations and with the ongoing farmers strike in Argentina traders expressed hope that some of their exports will go to U.S. ports.  Funds bought an estimated 4,000 contracts during the session.  May Soyoil closed up 1.32 at 55.77 and May Soymeal closed up the $20 dollar limit at 330.30 as traders continued to buy the Meal/Oil spread.  May Beans gapped sharply higher on Tuesday and closed up the 50 cent limit at 13.07, on spillover strength from Gold as well as U.S. dollar weakness.  The lingering strike in Argentina also added to the bullish psychology as rumors of importers shifting orders to U.S. origin Beans would help our already strong export market.  May Beans were trading synthetically between 13.58 and 13.61 at the close.  Funds bought an estimated 3,000 contracts during the session.  May Soyoil closed at 57.77, up its 2.00 limit, while May Soymeal also closed up it 20.00 limit at 350.30.  On Wednesday, May Beans gapped up the 50 cents limit, before profit taking set in, although renewed buying pushed the market back up to settle at 13.52, up 45 cents for the day.  The weaker dollar and strong Gold market supported the market as speculators continued buying as a hedge
for inflation.  Also the lingering strike in Argentina continued to promote ideas that importers may be switching their buying to U.S. origin Beans.  Analysts expect a range of 300,000 to 700,000 metric tons of Beans was sold in the USDA weekly export report to be released on Thursday, prior to the open.  On Thursday, prior to the open, the USDA reported last week's Soybean exports totaled 532,300 vs. 438,000 m.t. last week.  That brought our cumulative sales year to date to 96.5 per cent of the USDA forecast as compared with the 5-year average of 89.9 per cent.  It was a solid number in a week prior to a major report, with China being the largest buyer.  May Beans opened lower and settled at 13.27 ¼, down 24 ¾ cents, as news of a possible resolution of the farmers strike in Argentina pressed the market lower.  The CBOT also raised margins for Soybeans and Soymeal and some market participants used that move as an enticement to reduce their risk exposure.  Funds sold an estimated 3,000 contracts during the session.  On Friday, May Beans gapped lower and closed at 12.67 ½, down 60 cents, on end of month and quarter position squaring as well as expectations for a bearish planting intentions report on Monday.  A survey of analysts saw a range of between 70.0 million acres to 74.2 m.a., with an average of 71.5 m.a. vs. last year's 63.6 m.a.  Rumors of a possible settlement of the 16-day farmers strike in Argentina also encouraged sellers and prevented any rebound prior to the close.  Funds sold an estimated 3,000 contracts during the session.  May Soyoil also fell 2.50, the newly expanded limit, to settle at 54.98 as the U.S. Census Bureau revised February Soyoil stocks data upward to 3.101 billion pounds, from 2.681 reported Thursday.  May Soymeal closed at 342.30, down 6.60, although it benefited from liquidation of the long Soyoil/short Soymeal spreads.  In last weeks report I recommended buying the May Soybean $15.00 call for 12 cents or less, which should have been filled on Monday.  I also recommended taking profits at 30 cents or higher, which should have been filled on Tuesday for a gross profit of 18 cents ($900.) less trade costs.  No new recommendations this week in lieu of the USDA planting intentions report to be released prior to the open on Monday. 

CORN

On Monday, March 24^th, May Corn settled 17 ¼ cents higher, at 5.24 ¾, in a technical rebound from oversold prices along with strong spillover support from the Soybean market.  Expectations of sharply reduced acreage in the USDA planting intentions report to be released next Monday also underpinned the market.  Flooding in the southern Corn belt and forecasts for heavier than normal precipitation in the Midwest also contributed to the bullish psychology in the market.  During the session, the USDA reported Corn export inspections totaled 42.25 million bushels vs. 48.8 m.b. last week and brought the cumulative total top 58 percent of the USDA forecast vs. 52.4 percent as the average over the past 5 years.   The inspections report was on the high end of analyst's estimates and reminded traders that with strong world demand Corn cannot afford to lose too many acres to other markets in spring planting, if we wish to retain a supply cushion going forward.  Funds bought an estimated 5,000 contracts during the session.  May Corn gapped sharply higher on Tuesday, and closed up the 20 cent limit at 5.44 ¾, on spillover strength from Soybeans, Gold, and weakness in the U.S. dollar.  Wet conditions in the southern Corn belt causing flooding were also supportive as it raised fears of planting delays.  Also the stability in the financial markets encouraged bulls to return to the market after last weeks sharp sell off.  A stronger basis in the cash market as farmer selling dried up, along with a lack of commercial selling also was price supportive.  Funds bought an estimated 6,000 contracts during the session.  On Wednesday, May Corn gapped sharply higher, but quickly sold off the highs on profit taking, before settling at 5.52 ¼, up 7 ½ cents for the day.  Spillover strength from Soybeans along with weakness in the U.S. dollar kept the market positive, although a brief run toward early session highs was rejected going into the close.  Lingering concerns regarding possible planting delays in the southern Corn belt because of excessive moisture, also was price supportive.  Many traders were looking to the USDA planting intentions report, to be released prior to the open on Monday, as being bullish to Corn.  The average of analyst's estimates is 87.387 million acres, down 6.2 m.a. from last year's 93.600 m.a.  In tomorrows weekly export report, analysts are looking for a range of 600,000 to 900,000 metric tons.  On Thursday, prior to the open, the USDA reported our Corn exports totaled 730,300 metric tons vs. 749,000 m.t. last week.  The report was in line with pre-report estimates, but trades focused on the upcoming USDA planting intentions report and ideas that there will be a larger than expected reduction in acres seeded to Corn.  May Corn closed at 5.55 ½, up 3 ¼ cents for the session.  Corn margins were also increased by the CBOT (from $1,350 to $2,025) and that may have prevented some smaller speculators from buying new long positions or may have forced current longs to exit the market.  However, the market still retained its bullish psychology with less acres seeded along with planting delays in the South Delta from excessive moisture.  On Friday, May Corn opened lower in sympathy with a sharply lower Soybean market, but the market rebounded as trade passed mid-session and closed at 5.60 ½, up 6 ½ cents for the day.  Goldman Sachs predicted a fall in Corn acreage to 84.1 million acres, down 10.2 percent from last year's crop and the lowest estimate of the analysts surveyed by the Dow Jones Newswires Survey.  Forecasts for continued precipitation in the Midwest and southern Corn belts also was bullish as it may delay the seeding of our Corn crop in those areas.  In last weeks report, I recommended buying the May Corn $5.50 call for 14 cents or less, which should have been filled on Monday, and to take profit at 30 cents or higher, which should have been filled on Tuesday, for a gross profit of 16 cents ($800.) less trade costs.  No new recommendations this week because of the USDA planting intentions report to be released on Monday.

WHEAT

On Monday, March 24^th, May Wheat closed at 10.20, up 32 ½ cents, in a technical rebound from oversold conditions last week.  As it became clear the outside financial markets showed stability, short covering an bargain hunting pushed Wheat prices sharply higher with May hitting a high at 10.62 ¼, before profit taking just before the closed trimmed the gains at session end.  In fundamental news. Turkey announced a tender to buy 250,000 metric tons of milling Wheat with a March 26^th deadline and shipment to be completed by the end of April.  During the session, the USDA reported Wheat export inspections totaled 18.1 million bushels vs. 15.6 m.b. for the week prior.  The report was in line with analyst's expectations.  Funds bought an estimated 2,000 contracts during the session.  KCBT May Wheat closed at 10.68 ½, up 36 cents for the day.  MGE May Wheat followed suit and closed at 13.19 ¼, up 42 ¼ cents for the day.  On Tuesday, May Wheat traded sharply higher, although profit taking off the highs trimmed the gains allowing May to settle at 10.67 ½, up 47 ½ cents for the day.  However, the close was over 50 cents below the high of the session at 11.18 ¾.  Spillover support from Corn & Soybeans along with a weak U.S. dollar sparked the rally with little fresh fundamental news to move the market.  Funds bought an estimated 3,000 contracts during the session.  May Wheat opened higher on Wednesday, but quickly sold off and closed near the lows at 10.33, down 34 ½ cents for the day.  Expectations for a bearish USDA planting intentions report next Monday along with ideas that US Wheat is priced too high compared to competition, also kept the market on the defensive for most of the session.  After the close, Egypt announced they were seeking 55,000 to 60,000 metric tons of Wheat in a tender, which comes on the heels of 415,000 metric tons of U.S. soft red Wheat purchased last week.  MGE May Wheat closed at 13.05, down 45 cents on the day.  KCBT May Wheat also dropped 50 cents to close at 10.69.  Weather forecasters predicted some moisture in the winter Wheat belt next week, although the western portion will be drier in an area that already has prompted some concerns of excessive dryness.  Funds sold an estimated 2,000 contracts during the session.  On Thursday, prior to the open, the USDA reported Wheat export sales totaled 562,800 metric tons vs. 168,000 m.t. last week.  The report was in line with analyst's pre-report predictions, but May Wheat opened lower and settled at 10.14, down 19 cents, on technical weakness from Wednesday's weak close and evening up of positions prior to the USDA planting intentions report on Monday.  In fundamental news, Egypt announced they bought 180,000 metric tons of U.S. soft red winter Wheat in a tender from Wednesday.  Looking forward to Monday's planting intentions report, analysts estimate all Wheat planting at 63.625 million acres, up from 60.433 m.a. last year.  Winter Wheat seedings were estimated at 46.986 million acres vs. 44.987 m.a. last year.  Spring Wheat seedings were estimated at 14.147 m.a., up from last years 13.297 m.a.  May CBOT Wheat closed at 10.14, down 19 cents for the session.  KCBT May Wheat closed at 10.54, down 14 cents on the day, and MGE May Wheat closed at 12.80 ¾, down 24 ¼ cents for the session.  Funds sold an estimated 2,000 contracts of CBOT Wheat during the session.  May Wheat opened sharply lower on Friday and closed at 9.89, down 25 cents, on profit taking at end of month and end of quarter.  There was also position posturing ahead of the USDA planting intentions report on Monday.  Spillover weakness from Soybeans, Gold and Crude Oil also contributed to the negative sentiment.  Funds sold an estimated 2,000 contracts during the session.  In last weeks report, I recommended buying the May Wheat $12.00 call for 20 cents or less, which would have been filled on Monday and risk to 15 cents, which would have been filled on Friday for a loss of 5 cents ($250.) plus trade costs.  No new recommendations for next week because of the USDA planting intentions report on Monday.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions are subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options.  The information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness.