FUNDS RE-CALIBRATE.............. Our weekly export sales report came out one day late due to last Monday's holiday. Wheat exports were 1 million metric tons a new marketing year highs since wheats marketing year began last June 1. It was up 60% from the week prior and 67% over our four-week average. Egypt and Iraq were key buyers with Egypt buying for old crop delivery before June 1 and for more wheat in new crop year delivery after June 1. It's no surprise here as Middle Eastern countries bring in food to ease civil tension over tight food supplies at high costs. Additionally, US winter wheat fields lying dormant continue to see dry conditions the next 6 to 10 days out. We break dormancy in March with the world awaiting the results as were the world number one producer exporter. Russia too had some bad news this week as frost and freeze has damage 10% of their wheat that's dormant. The USDA ag forum conference threw a bullish hat in the ring stating the 2011- 12 planted acres will be 57 m.a. versus 53.6 last year, but lower yields at 43.8 b.p.a. versus 46.4 due to the poor winter wheat start leaving ending stocks at 663 m.b. versus 818 this year. This could change to better or worse as weather prevails over the March through May growing season. China's wheat crop this week got some badly needed rain and snow keeping the crop from deteriorating further. The crops couldn't get any worse, but here's the defining issue. China is an importer not a exporter. When a exporters crop goes bad like Russia's did last August, wheat prices exploded to new highs and again when Australia's crop was wrecked as they have a long list of buyers ready for their harvest to buy every year. When the world calendar turns to May every importing wheat country turns to the US like clockwork as our harvest is beginning. A exporter problem leads to importers scrambling to find a seller at any cost driving up prices. But when a importer like China has a crop problem prices step back and wait for the buying to enter before going up. Reason, the market doesn't know how much or when they will buy. It becomes a future issue. Ok, now 2 out of 3 weather gurus I have looked at have March through May as warmer and drier than normal in the southwestern hard red winter wheat states of Kansas, Colorado, Oklahoma and Texas. Well, if they are right much higher prices are imminent when dormancy breaks as wheat went dormant in very poor conditions. Corn weekly export sales came in at 1.5 million metric tons a new marketing year high up 46% from the week prior and 62% over our four-week average. Key Asian customers were in for 468 t.m.t. versus 205 the week prior and Middle Eastern countries like Egypt and Saudi Arabia were in as well but the bullish trigger was Mexico in for 405 t.m.t. this week and 640 last week. The freeze early February that hurt their corn crop has them scrambling to get US corn. This has the trade fearing that the March 10 monthly USDA crop report will have to raise exports and again lower ending stocks currently sitting at 15 year lows as the Mexico and middle eastern food Shopping spree could not have been planned. Mexico is the world's fourth-largest producer humbled down to a corn buyer. Traders surely fear their demand will continue as well as Middle East countries looking to calm civil unrest over food inflation and shortages. The ag forum conference didn't help. They projected corn acres this year to be 92 m.a.up from 88.2 the year prior. Higher export projections and ethanol consuming more corn leaving ending stocks at 865 m.b. versus 675 this year. Well, if weather is perfect here and abroad we won't run out, but anything under 1 b.b. is dangerously low meaning we will enter next year more bullish than we entered this year after last year's ending stocks were 1.7 b.b. There is less than no room for error in the growing season. Bean weekly export sales were more of a collective bullish report. We saw cancellations of previous old crop purchases again seeing less for old crop shipment and more buying for new crop shipment after September 1, with old crop net sales of only 134 t.m.t. but new crop 1.1 m.m.t. with China in for a combined 1.2 m.m.t. The ag forum had the USDA suggest planted acres this year of 78 m.a. versus 77.4 last year with ending stocks at 160 m.b. versus 140 this year. That couldn't be any more bullish. The last three years had early ag forum estimates looking at 282 m.b. to 300 plus ending stocks to begin with and ending up under 200 m.b. to as low as 130. So our starting point sets us up to see some huge weather rallies on a dry forecast. What a week, all of the low end support prices I gave for this week on the downside were met followed by a big rally. Funds sold tens of thousands of grain contracts early and bought metals and crude oil. Then weeks end saw funds buying back what they sold making for one of our most volatile weeks of the year so far. March is usually a buying month for funds as they add long's for the uncertainty of the planting and growing season. March has three issues lending to a bullish month and by that we should close higher at March end versus February end. The first issue, southern Delta states begin to plant, mostly in the second half of the month. Cotton growers look to plant 14% more cotton at the expense of less soybeans and corn acres in that order. Second issue, the low acres and ending stocks from the ag forum this week will set in a bullish mindset going into the March 31 planting intentions report when farmers say what they intend to plant. Third issue, weather for wheat as it breaks dormancy.. March weather is always miserable creating concern for wheat. The wildcard is the lofty prices were already at could have us continue to see sharp rallies to new highs met by sharp selling such as we saw this week. Let's get to the technicals. May corn support lies at 6.88 then 6.76 on trend lines. A close under 6.76 sets up a point of support at 6.50. Resistance was broken Friday putting the new one at a point of resistance at the old high of 7.44. May beans support is 13.00 then 12.75. Resistance is 13.75 just about Friday's close. If they break through it , 14.25 is next then 14.65. May wheat support is 7.90. It's huge because a close under sets up 7.10 as next stop. Resistance is 8.25 then 8.50