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October 13, 2006

Trading locked limit up at the CBOT twice more this week. This was the fourth week of a bull run in all three exchanges as funds took the CBOT to historic levels. Anyone holding a bear spread (ie. short nearby/long deferred) lost big as funds bought December. The CBOT traded nearly a million ag contracts in one session last week.

Index funds and speculators took the markets up, but fundamental support was plentiful. Today's export sales report* showed the Egyptian and Iraqi purchases, setting the marketing year high at 692 TMT. Australian crop woes set off the run and the USDA confirmed with an 11 MMT production forecast (down from 25 MMT last year). Brazil's crop is down nearly 2 MMT, the Argentine not doing great and Ukraine has mandated export licensing to limit exports. On the bright side, weather is looking good in the U.S. Plains.

CBOT nearbys up 62 cents/bu, up $1.33/bu since September 15. KCBOT was up 41 cents/bu and MGE up 42 cents from last week.

Spread in HRW and HRS basis offers between traders was 10 cents/bu. Median basis levels down only slightly from last week.

The spread between SRW and HRW nearby cash values has declined from $1.77/bu ($65/MT) in July to 47 cents/bu ($17/MT) this week.

SRW nearby cash premium to SW up 24 cents to 61 cents/bu ($22/MT).

Durum price range up $15/MT on the bottom end and $10/MT on higher qualities. Lakes program ranging from $5.72/bu ($210/MT) to $5.99/bu ($220/MT).

Barge rates settled back this week. Farmers are bullish corn, waiting to sell. Lack of corn moving from the country has left vessels idle. The pace of harvest, especially beans, has also slowed down due to wet conditions in the field.

Ocean freight stable. Atlantic routes down $1/MT, Pacific routes unchanged. The Lakes were unchanged for the second week but remain extremely strong.

(See attached file: PR061013.pdf)(See attached file: PR061013.xls)

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