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Bearish corn

Historical Price Trends: best odds for the week of July 21, according to
our HPT page is for CME October Lean Hog futures. Over the most recent ten
years, odds of 80% for lower October Lean Hog futures than where they
closed on Friday of the previous week. On average October Lean Hog futures
80% of the time has closed $0.95 lower. Please access our Historical Price
Trend page for the balance of the commodities odds for next week.

For The Week: for the week of July 14th, September corn futures value
decreased 12%, September soybean futures value decreased 10% and Sept CBOT
SRWW value decreased by 3%.

For The Month: thus far for the month of July, Sept corn futures value down
17.4%, September soybean futures value decreased 8% and September CBOT SRWW
value decreased by 6.3%.

Technicals: For the short term trader, Allendale uses its own unique custom
Moving Averages to monitor price momentum, define key support and
resistance levels as well as advise where key pivot points are located when
bulls may turn bearish and bears to turn bulls. We also include last weeks
closing price for the weekly chartist as we draw closer to the end of the
week to anticipate the possibility for futures to have a positive weekly
close or if weakness is ensuing. A detailed technical look at the grains
and livestock are available within our Allendale Advanced Charts.

Conclusion: every commodity listed above has breeched its #1 and #2 Moving
average. Anticipate technical traders to sell rallies up against the lower
Moving average as listed.

Wheat: short term technically mixed. To turn trader momentum to bullish a
close above 8500 vs the Dec CBOT SRWW futures is needed. Fundamentals
remain mainly neutral as strengthening exports and feedwheat use offsets
the general trade perception of a larger 2008 supply. True the supply is
bigger in 2008 but world demand continues to rise and projects world end
stocks to use of 17.3% representing the second tightest levels dating back
to 1980 and second only to 2007. Despite the tremendous weakness in
neighboring corn and soybean trade pits on Thursday and Friday, wheat is
performing well on its own.

Export Sales: of the total use for 2008/09, exports account for 43%. Thus
far in the marketing year, cumulative sales are 27% higher than last year
and 21% above the five year average.

Wheat Spread: The Dec wheat-Dec corn spread is strengthening. The spread
closed at $2 premium the Dec wheat and is maintaining an upward bias.
Technical based support is $1.78 with resistance at $2. A year ago the
spread traded sideways from a low of $1.60 to $2.05 from July to late
August and then broke out to the upside. Consider applying the spread on a
pull back to present support and use $2 as the objective.

Wheat Crop Marketing: $6.18 cash wheat requires 4.5 cents of carry per
month. If not hedged, make certain your local cash markets are offering you
sufficient carry. The present Sept-Dec wheat futures spread is offering 24
cents carry (actual cost is 13.5 cents) Allendale has 65% of anticipated
2008 wheat production hedged in the Dec futures. We see no reason to hedge
new crop above the 65% level we have on for now.

Cash Peak: Dating back to 2000, odds favor a national cash wheat peak for
the month of December. Of the most recent eight years, dating back to the
year 2000, the national cash peaked has hit the month of December 50% of
the time with various other months such as Oct and Nov, April and May only
once. We will monitor cash and futures spreads and the history stated above
to make our decision to make initial 2008 cash sales.

Trade Posture: Technicals are mixed. Fundamentals are mainly neutral to
turning bullish. Egypt is a persistent buyer of wheat and other north
Africa and Middle East countries are anticipated to follow soon. Allendale
is willing to buy wheat on penetration of overhead technical resistance.

Conclusion: you have to be a equally impressed with wheat export sales as
you are with poor soybean sales. With weekly wheat sales 4.5 million
bushels stronger than the previous week and 3.5 million bushels more than
the top side of pre release estimates, Thursday's results are fundamental
proof of the international demand interest in high quality US new wheat
supplies.

Corn: technically bearish, Fundamentally bearish to corn is the weakness in
crude oil futures and a host of agriculture commodity liquidation with
money diverted into an improving stock market. Bullish to corn is 2008/09
projected end stocks to use to be the second tightest dating back to 1980
for the US and the tightest world corn stocks to use at 11.9% dating back
to 1980.

New Crop Marketing: The total amount hedged as a percent of anticipated
2008 production is 25%. 6250 vs the Dec 2008 is key support, immediate
resistance is 6930 with 7320 as more solid resistance. As stated in the
special report on pollination just below, we are likely to use the next
corrective rally to add additional hedges. We will monitor and alert when
to resume hedges.

Export Sales: of the total use for 2007/08, exports account for 19%. Thus
far in the marketing year, cumulative sales are 11% higher than last year
and 12% above the five year average.

Trade Posture: Fundamentally Allendale remains long term bullish to corn on
tight stocks to use for specifically corn and total world grain stocks to
use. Corn and soybean and soybean products are pressured by the sell off in
crude oil futures, short term beneficial weather and end to the Argentina
farmer strike. Dating back to Feb 8, 2008, Sept crude futures have not
closed below its key pivot point, until Thursday. The sell off in crude
both fundamentally and technically driven continues to be of key influence
to the corn and soybean weakness. Allendale respects improving crop
conditions, however crops conditions at the present stage of growth is not
likely a true indicator of impending yield. Technically Allendale is
bearish. Allendale bought Dec corn on Friday as outlined in our Grain
Trading Strategies page for entry, risk and objective.

Please Turn Your Attention to Allendale's "Of Interest" page: What better
timing than to release the graphic of where Allendale suggest the largest
percentage of the central Iowa corn crop is expected to pollinate in 2008.
Wednesday's fundamental drive higher was based on increasing concern of
high heat moving into the corn belt the last few days of July and may place
corn yield at risk. Private weather services are beginning to come to
agreement, heat is on the way and also agreeing it may be more than just a
2 to 3 day affair.

As the 2008, spring plantings and emergence were behind its normal
pace, the trade began to anticipate the corn could be exposed to the worst
of the high heat by the end of July rather than its more typical time of
the middle of the month.

Two facts to view on the Of Interest page. #1 is the normal pace of
growth typically places the greatest percentage of the crop during the
highest of average temps. The highest of average temps occur in the middle
of July, NOT the end of July. 32 fact is with the two week lag in 2008 crop
silking/pollinating actually places less of the crop in the hottest of
average temps and places nearly 50% of the crop pollinating when average
temps are declining.

Conclusion: as futures begin to run higher on the high heat/crop
pollination risk, Allendale anticipates funds to continue to push corn
futures higher and may offer the opportunity needed to cash in the last 30%
of the 2007 corn inventory we remain holding. The perception these funds
may trade higher may also allow for additional new crop hedges to be
placed. If our research is correct and central Iowa's corn crop pollinates
successfully, when the September crop production is released, actual yields
could be much healthier than what the trade had anticipated.

Soybeans: At about the same exact moment Friday noon maps removed the
forecasted heat discussed for much of the week, Argentina's President has
made it official, the plan to increase export taxes on corn, wheat and
soybeans is over. Most likely, Argentina may rush to catch up on previously
stalled exports. The Argentina news and positive weather outlook is bearish
to new crop futures and bull spreads. Bullish to beans is the fact both
domestic and world stocks to use are tight. Bearish to soybeans is
prospects of Argentina farmers to expand planted acres in 2008 as a result
of high input cost for corn. Bearish to soybeans is the weakness in crude
oil futures.

Export Sales: of the total use for 2007/08, exports account for 38%. Thus
far in the marketing year, cumulative sales are 1% higher than last year
and 13% above the five year average.

New Crop Marketing: We will hold hedges of new crop at 40% of anticipated
2008 production and alert when to resume. Technical chart based support is
14100. The technical trend is down short term, and on Friday broke below a
long term up trend which has been in place since Feb 2008. We will alert
before resuming hedges, and plan to cover short futures hedges with bull
call spreads or use puts vs outright selling of futures. We will alert you
when to resume hedges.

Trade Posture: Allendale remains long term bullish to soybeans as 2008/09
ending stocks are estimated at 140 million bushels and has a projected end
stocks to use of 4.7% vs old crop stocks to use of a record low 4.1%.
Allendale is aware of the potential bearish ramifications of potential CFTC
action on speculation.

Lean Hogs: While we may have gotten the rebound in cash hog prices right we
certainly have been surprised by the size of it. The lean hog index will
break $76 now. It is good news and we are back to our expected true value.
However we are not sure if there is much left. The resurgence in concerns
about the economy is likely a big driver here. For speculative trading our
recommended August/October spread settled at $4.25 today which is almost at
our $4.50 objective. We still cannot justify October and December at their
current prices though.

2009 Lean Hog Contracts: Even if you are bullish about the near term you
have to be concerned about summer 2009 contracts. Corn prices have dropped
significantly this month. In the past week alone December corn futures fell
80 1/4 cents. The key question here is will sow liquidation continue at the
rate needed to sustain a 30% price increase in hogs? Yes, you read that
right. 2009 summer futures are implying over a 30% price increase will
happen. Let's be realistic here. We need to see supply drop by a good 7% to
15% AS WELL AS an increase in demand to make that type of increase.

We are seriously concerned many 2009 contracts are overpriced. We have
orders to hedge 25% of expected marketings for the May through July 2009
time frame using the May, June, and July futures for Monday morning.
Currently we are 100% hedged up through December and 25% hedged up for
January and February marketings using the February contract.

Live Cattle: With the very disappointing cash cattle trade this week it is
likely feedlots did not sell all available cattle. That will put a few
extra into next week. In other words if wholesale beef prices continue to
decline feedlots will be even in a worse situation than this week. We have
been amazed this market has let so much of the hot air out so quickly.
While we can certainly argue the drop in corn is a prime factor we also
have to wonder how much was related due to speculative action. Cattle, and
not lean hogs, had been trading at inflated values for many months. We are
neutral to bearish cattle prices.

Allendale is registered with the CFTC and NFA and is a member of the NIBA.
The bottom line is we are a regulated firm which can be extremely important.

Historical Price Trends: best odds for the week of July 21, according to our HPT page is for CME October Lean Hog futures. Over the most recent ten years, odds of 80% for lower October Lean Hog futures than where they closed on Friday of the previous week. On average October Lean Hog futures 80% of the time has closed $0.95 lower. Please access our Historical Price Trend page for the balance of the commodities odds for next week.

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