PRESIDENTS DAY............ NOTE, Monday sees the grain market day session closed as the exchange celebrates the Presidents' Day holiday. Thursday's weekly export sales report came out at 7:30 AM central time telling us how much of each grain was sold for near  to long term shipment. Wheat sales were 599 t.m.t. up 53% from the week prior. Sales went to all the politically sensitive areas like Egypt, Israel and heavily populated areas short on wheat like Nigeria, Mexico and assorted Asian countries. There's been much talk of demand picking up big-time as Middle Eastern countries with civil unrest may want to bring in more wheat, which makes food instantly to settle problems with food shortages. To some extent this is happening but not in a big way. Were seeing a lot of small marginal countries buying small tonnage. No monster sales that suggest panic buying or hoarding intentions are occurring. The demand on pricing remains friendly though to mildly supportive to prices. Wheats longer-term fate begins in March. That's when the US winter wheat crop breaks dormancy and greens up. April through May 15 is when the ahead with kernels are developed with yields and quality determined. Because of last year's disastrous world wheat problems for some degree in every major producer exporter, this year's harvest and weather related issues will be overly traded. You saw the big price rally when the Russian crop went sour, then again when Australia's crop problems arose. The US is the worlds largest wheat producer exporter. The key here is exporter. Nobody produces more wheat than China, but we have to watch the big producer exporters. The winter wheat crop is the lower quality hardy wheat that largely goes for bread making and is the wheat we  export to the European countries that count on bread for 35% of their diet. The US winter wheat crop went dormant last November rated 47% of the crop in good to excellent condition, versus 63% the year prior. This rating was historically low due to dryness in are  big Western plains producing states Kansas, Oklahoma, Colorado and Texas. Needless to say , this crop will be challenged to break dormancy and find better than perfect weather to improve quality. The winter dormancy saw a continuation of the drier than normal pattern with little snowfall, but it's what the weather does March through May that counts. March green up period historically is not important as the head is not developed but the world situation changes the psychology. Should March set up drier, prices will trade fear of it continuing to April before the actual fact. Were the first major 2011 producer to come online to affect the world supply of high protein milling wheat for human consumption. Canada due to its northerly position breaks dormancy and matures  4 to 6 weeks behind the US with the European countries to follow. On the demand side , China is the wildcard. China's needs are many but they're facing a real wheat dilemma. 36% of China's winter wheat is under drought conditions . If the drought continues through March it won't be able to reverse the damage. Crop damage in China never equates    to how much they buy  as their needs are always greater than their purchases. But what setting up to be a historic drought  , could lead to China buying large amounts of wheat here. Corns  weekly export sales came in at 1.030 million metric tons over 1 million metric tons for the third consecutive week. Mexico was the featured buyer at 640,000 metric tons. As I noted on my Wednesday report Mexico's freeze in early February hit their corn crop with losses estimated at 17% of the crop. Their aggressive   buying so soon after the weather damage suggest they see losses much bigger than initially reported and  may be a major demand event for US exports the next two months. Soybean weekly exports were 514 t.m.t. with China in for only 79. This is old crop year export sales. Export sales for the new crop year delivery after September 1  was 1.022 m.m.t. with China in for 524t.m.t. This again shows China's shifting demand needs from old crop delivery to new crop year delivery after September 1.It means for demand were less demand bullish near-term and more demand bullish long-term. Certainly this promotes the long November short July bean spread. We  first noted what we believe would be a shift in bean export delivery dates two weeks ago. The footprint to this continuing is based on these issues. One, Obama meets with China  early in the month to negotiate this years grain trade agreement. Three days later China buys a record 3 million metric tons but not to be delivered  until the new crop year after September 1. Two, the February 9 USDA monthly crop report comes out leaving this crop seasons ending stocks inventory unchanged from the months prior, a real surprise to the trade expecting higher export adjustments and lower inventory as was seen the six months prior. Three, we have seen three cancellations by China of  previous purchases for old crop delivery before September 1 to re-ship after September1. That could mean taking delivery any time after the fall harvest  right through to early 2012. Its all clear what's going on but as I noted prior, a slowdown in near-term demand does not mean were going to export less but it means we won't put ending stocks under 100m.b. or encourage talk of running out this year. Let's cover the technicals. Since March contracts go into delivery in five trading days let's move to May now. May corn support lies at 710 then 702. A close under 702  leaves 680 next stop. Resistance is 743. May beans support lies at 13.65 all week. A close under and 13.00 is next as a double bottom. Index and trend following funds eat up doubled bottoms and tops. Resistance is 1440, then 1465. A close over 1465 and 15.00 is next stop. May wheat support entering Friday was 865 and 870 next Tuesday when we return from the holiday if not taken out Friday. If 865 is taken out or 870 Tuesday, 8.50 is next support. A close under a 850 sets up 7.90 as worst case scenario. Resistance is 9.10 with a close over setting up 9.35