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October 20, 2006

Futures prices fell this week with nearbys at the CBOT down 21 cents/bu - still $1.13/bu higher than September 15 - both the KCBOT and MGE were down 12 cents/bu.

High futures prices have dampened export interest, making the FOB market difficult to define. Basis prices in the Lakes and Gulf programs were generally unchanged from last week for all classes. HRW and HRS basis prices strengthened in the PNW.

The spread between SRW and HRW nearby cash values bounced back up to 56 cents/bu ($21/MT) from 47 cents/bu last week.

Soft wheat spread: SRW nearby cash premium to SW fell 13 cents to 48 cents/bu ($18/MT).

Durum price range unchanged this week. Export prices derived from domestic market, lacking dialog with importers. Lakes program nominally ranging from $5.72/bu ($210/MT) to $5.99/bu ($220/MT).

Barge rates declined for the second week as corn/bean producers hold off on marketing their grain. Rates on the Ohio, (SRW, corn and soybean country) fell 11 to 18%($3/MT) from 2 weeks ago and are 15 to 26%($4 to 7/MT) below year ago levels. HRS movement did not fall as much, the Minneapolis to NOLA rate traded at $37/MT compared to $39/MT two weeks ago and this week last year.

Ocean freight markets seem to have run out of steam. Fundamental reasons include reduced grain (wheat) exports from the Ukraine and Australia and reduced iron ore and coal movement from China, Brazil and Australia. Market equilibration is likely the larger factor as this seems to be a topping of the bull run. Pacific routes strengthened more during the rally, drawing supply out of the Atlantic, causing the Pacific to fall the farthest this week.The PNW-Japan rate is at $37/MT, down $2/MT. Most Atlantic routes fell $1/MT. Rates in the lakes remain extremely strong due to a shortage of vessels. Duluth-Rotterdam is over $61/MT this week. Traders optimistic for an ease in rates before the lakes close for the winter.

(See attached file: PR061020pub.xls)(See attached file: PR061020pub.pdf)

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