WEEKLY GRAIN UPDATE

For week ending April 11, 2008

by

LYNN SMITH

Senior Futures Broker

ZANER GROUP

800-470-1406

lsmith@zaner.com

SOYBEANS

 On Monday, April 8^th, May Soybeans opened higher on follow-through momentum from last weeks recovery, but profit taking and position squaring ahead of the USDA supply/demand report on Wednesday turned the market lower and May Beans closed at 12.55, down 22 cents for the day.   Traders expressed concern that the current planting delays in the Midwest and Southern Corn belts may result in increased Soybean planting , if the wet weather persists.  Rolling of positions out of May also pressured the front month contract.  During the session, the USDA reported our export inspections for last week totaled 12.2 million bushels vs. 23.8 m.b. for the week prior and 20.0 m.b. last year at this time.  It was a bearish report, but the 4 week trend is still higher than last year at this time.  May Beans closed at 12.51 ½, down 3 ½ cents on Tuesday, as traders positioned themselves for the monthly USDA supply/demand report to be released on Wednesday.  Traders were also watching the Soybean/Corn spread with the ratio ending at just below 2 to 1, a figure that might give undecided farmers economic incentive to plant Corn.  Analysts projected an average ending stocks figure of 157 million bushels for the USDA report on Wednesday, up from their March estimate of 140 m.b. (range of estimates 120 m.b. to 180 m.b.)  On Wednesday, prior to the open, the USDA increased the Soybean carryover total to 160 million bushels, up 20 m.b. from last months report.  The report was slightly over the average analysts estimate, but well within the range of estimates.  May Beans closed at 13.13, up 61 ½ cents for the day, on spillover support from crude oil and a weak U.S. dollar.  Also, talk of a resumption of the farmer strike in Argentina added fuel to the bullish thinking and pushed May Beans up the 70 cent limit before profit taking took it off limit on the close.  Analysts estimated Soybean exports should total between 200,000 to 600,000 metric tons in the USDA export report to be released on Thursday.  On Thursday, prior to the open, the USDA reported our Bean exports totaled 583,000 metric tons last week vs. 184,000 m.t., and 87 percent over our four week average.  China was in for 286,000 metric tons of that total, indicating the farmers strike in Argentina was having an impact on the availability of Beans for export.  May Beans closed at 13.56, up 43 cents on the day, on the strong export business and aggressive short covering.  Ideas that farmers still have not committed to their spring planting allocation prompted buying in the Beans so as to prevent any slippage in acreage to Corn.  The funds bought an estimated 5,000 contracts during the session.  On Friday, May Beans opened higher, but lacked follow through buying and quickly reversed course closing down 23 ½ cents, at 13.32 ½.  Spillover pressure from a weak equity market encouraged longs to lock in profits prior to the weekend, with uncertainties regarding a resumption of the Argentina farmers strike, as well as weather concerns in the Midwest possibly delaying Corn planting.  Funds sold an estimated 2,000 contracts during the session.  In last week's report, I recommended buying the July Soybean $16.00 call for 30 cents or less, which should have been filled on Monday, and risk to 23 cents, which also should have been filled on Monday, for a 7 cent loss ($350.) plus trade costs.  For next week,  I would look to buy the July Soybean $16.00 call for 25 cents or less, risk to 18 cents, and target 50 cents or higher for profit taking. 

CORN

On Monday, April 7^th, May Corn closed at 5.90, down 8 cents, on profit taking and a seasonal tendency to sell Corn at this time of the year.  Spillover pressure from a sharply lower Wheat and Soybean market pushed the market to the 5.87-5.88 support area, which held, allowing for a slight recovery going into the close.  During the session, the USDA reported Corn export inspections totaled 48.532 million bushels last week vs. 42.25 m.b. the week prior.  It was a friendly report, but not enough to overcome the profit taking and hedge pressure as farmers get ready to plant once the soil dries out.  May Corn closed at 5.91 ¼, up 1 ¼ cents on Tuesday, in a choppy session with little direction to pricing.  Traders also positioned themselves ahead of the monthly USDA supply/demand report to be released on Wednesday.  Analysts expect as average carryover of 1.303 billion bushels, off from 1.438 b.b. forecast in last months USDA's report.  Most analysts expect farmers to plant more than the USDA forecast of 86 million acres based on the current price ratios which favor Corn over Beans.  Wet weather forecasts across much of the Midwest also were price supportive. On Wednesday, prior to the open, the USDA lowered our Corn stocks carryover to 1.283 billion bushels vs. 1.438 b.b in last months estimated.  The USDA increased our Corn export projections by 50 million bushels and also increased feed usage by 200 m.b., while reducing ethanol production by 100 million bushels.  Based on average yields and assuming the planting intentions report on March 31^st was accurate, we would be down to about 500 m.b. in ending stocks after this season's harvest.  May Corn opened sharply higher and closed at 6.05, up 13 ¾ cents, after first posting an all time high of 6.16 for a front month contract.  Spillover strength from energy, metals and Soybeans also contributed to the bullish atmosphere with the Funds buying approximately 8,000 contracts during the session.  On Thursday, prior to the open, the USDA reported our Corn exports totaled 483,500 metric tons vs. 945,700 the week prior.  It was a weak export report and along with weakness in the metal and crude oil markets, May Corn closed at 5.94 ½, down 10 ¾ cents for the day.  Weather forecasts calling for a period of dry weather next week also prompted profit taking, although Goldman Sachs maintained their 3 month price forecast at 6.50 and raised their 6-12 month projects to 7.25 from 6.50.  Funds sold an estimated 2,000 contracts during the session.  On Friday, May Corn opened lower and closed at 5.84, down 10 cents, as pre weekend profit taking and spillover weakness from Soybeans pushed the market lower.  Weather forecasts for next week showing a drying trend also was bearish, although some traders had reservations as to whether the "window" would be open long enough to plant the crop before the next weather system comes through.  In the Midwest, Corn needs to be planted by May 5^th, to avoid the possibility of losing yields if planted after that date.  Funds sold an estimated 4,000 contracts during the session.  In last weeks report, I recommended buying the July Corn 7.00 call for 22 cents or better, which should have been filled on Monday, risk to 17 cents, which should have been filled on Tuesday, for a loss of 5 cents ($250) plus trade costs.  Next week I would look to buy the July Corn $7.00 call for 15 cents or less, risk to 10 cents, and target 25 cents or higher for profit taking. 

WHEAT

On Monday, April 7^th, May Wheat closed sharply lower at 9.21 ¼, down 53 cents on the day, as traders booked profits once the MGE May Wheat began to trade off the 60 cent limit higher at 13.95.  MGE May Wheat had been up the 60 cent limit for three straight days at the end of last week, but after going up the 60 cent limit today it began to trade lower and settled at 13.50, up 15 cents for the session.  As the CBOT Wheat and KCBT Wheat lost the support from MGE Wheat, the rout was on as may CBOT Wheat briefly hit limit down at 9.14 ¼, before the market bounced a bit at the close.  KCBT May Wheat closed at 9.79 ¼, down 49 ¼ cents for the session.  Expectations for a large Wheat harvest in the Northern Hemisphere with few weather problems currently, contributed to the negative sentiment.  Traders also expect an increase in the U.S. Wheat carryover to be released by the USDA on Wednesday, with an average analyst's estimate of 261 million bushels vs. 242 m.b. estimated by the USDA in March.  Funds sold an estimated 4,000 contracts during the session.  May Wheat recovered a portion of the hefty losses sustained on Monday by closing 12 ¾ cents higher at 9.34, in a typical "turn-around-Tuesday" fashion.  Bargain hunting and short covering pushed the market higher, although traders appeared to be reluctant to take new positions prior to the USDA month supply/demand report on Wednesday.  Funds bought an estimated 2,000 contracts during the session.  On Wednesday, prior to the open, the USDA kept its Wheat carryout estimate at 242 million bushels, unchanged from the month prior.  They also raised the world carryout to 112.5 million tons vs. 110.4 m.t. vs.  their March estimate.  The U.S. carryout was under the average analyst's estimate of 261 million bushels, however the increase in the world stocks was seen as negative, so the report was seen as neutral to pricing.  May Wheat opened lower on forecasts for rain in the U.S. Plains bringing with it expectations for a bumper crop.  However, spillover support from a limit up move in Soybeans and sharply higher prices in the Corn pit pushed May Wheat into positive territory, before late profit taking brought the market back to unchanged for the day.  May Wheat closed at 9.23, down 11 cents on Thursday, as technical selling along with expectations for increased world supplies pressured the market lower.  May Wheat would have likely dropped further, but for a strong Soybean market which prevented any further damage.  Prior to the open, the USDA reported Wheat export sales totaled 763,600 metric tons last week, up 70 per cent over the week prior.  Analysts had expected a range of 300,000 to 750,000 m.t., so the report came in just over the high end of their estimates, but improved weather forecasts appeared to be the focus on trader's minds.  Funds sold an estimated 1,000 contracts during the session.  On Friday, May Wheat closed down 26 ½ cents at 8.96 ½, on spillover weakness from Corn and Soybeans.  Expectations are growing for a large winter Wheat harvest around the world, switching the focus of Wheat traders to supply side fundamentals, where heretofore demand had been the driving force.  Funds sold an estimated 2,000 contracts during the session.  May KCBT Wheat closed at 9.53 ¾, down 21 cents and MGE May Wheat closed at 12.92, down 33 cents on the day.  In last week's report, I recommended buying the July Wheat 12.00 call for 35 cents, which should have been filled on Monday.  My stop was 30 cents, which also should have been filled on Monday, for a loss of 5 cents ($250.)  plus trade costs.  Next week I would recommend buying the July Wheat $8.00 put for 25 cents or less, risk to 20 cents, and target 50 cents or higher for profit taking. 

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.