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October 6, 2006
Trading was halted on Wednesday at the CBOT after reaching the limit 30 cent/bushel rise. CBOT currently at the highest level in 10-years. This was the third week of a bull run in all three exchanges, credited to both fundamental and technical factors.

Fundamental support based on Egypt and Iraq booking shipments, although import demand still very limited according to traders. Poor conditions continue in Australia. Ukraine has mandated export licensing to limit exports and the U.S. Plains remain dry.

The spread between SRW and HRW nearby cash values now at 60 cents/bu ($22/MT), down from $1.77/bu ($65/MT) in July. Technical explanation: CBOT is the proxy for "world wheat." Tightened world supplies have the funds interested/bullish and the CBOT has gotten very volatile, ranging 27 cents/bu on Wednesday. Fundamental explanation: Good rains in Argentina and large harvests in Kazakhstan and Canada indicate better outlook for world supplies that compete with HRW and HRS, limiting gains. Traders believe the technical factors are driving the markets more.

CBOT nearbys were up 21 cents/bu (gaining 72 cents in 3 weeks) after climbing 27 cents last week. KCBOT was up 6 cents/bu and MGE up 11 cents from last week.

With SRW futures through the roof, basis premiums down from last week...but only slightly (2-5 cents/bushel) as exports are competing with peak corn and bean harvest.

SRW nearby cash premium to SW up a dime to 37 cents/bu ($14/MT).

HRS and HRW basis prices nearly unchanged from last week.

Durum price range stable at $5.31/bu ($195/MT) to $5.72/bu ($205/MT) in the Lakes.

Barge rates broke out of a 5 week range on the corn and bean harvest. Rates in the central Mississippi river saw the largest rate jump, rising 30%($4/MT) from Cairo to Memphis. Minneapolis to NOLA traded at $39/MT compared to $37/MT this week last year. Cincinnati to NOLA rose to $30/MT compared to $25/MT last week and $37/MT last year.

Ocean freight competing with steel and iron ore shipments. Chinese demand added strength to Pacific routes (despite the Golden week holiday) while Atlantic routes were calm. The Lakes were unchanged, but remain extremely strong.

(See attached file: PR061006.pdf)(See attached file: PR061006.xls)

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