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November 3, 2006

(See attached file: PR061103pub.pdf)(See attached file: PR061103pub.xls)
Futures prices declined for all classes this week with CBOT nearbys down 16 cents/bu on the week and down 33 cents/bu ($12/MT) from October 13. KCBOT nearbys down 8 cents and MGE down 5. Corn futures rose 12 cents/bu.

Winter wheat outlook: The International Grains Council forecasts a 4% worldwide increase in 2007/08 wheat planted acreage, 5% increase in U.S. winter wheat area. Weather conditions have been poor for SRW due to cool temps and wet fields that have delayed emergence and growth. Traders are not concerned that current moisture levels in the Great Plains are considerably dryer than this week last year. On Monday, USDA reported that 91% of U.S. winter wheat is planted, equal to the 5-year average. 60% of the crop was rated good to excellent, up 3 points from last week but 1 point below a year ago.

Canadians had serious trouble planting their SRW crop. Because Ontario has been too wet they were only able to get 50% of intended acreage planted. With production increased by 75% this year to 1.6 MMT, Canadian SRW has been very competitive in India and Egypt.

Futures prices fluctuated with technical profit taking and beneficial weather in the Plains countered by a strong export sales report. Markets are showing strong carries - deferred months more expensive than nearbys. The carry provides incentive for farmers to wait to market grain beyond the December delivery, forcing exporters to increase Nov/Dec basis prices to draw grain from the country.

With the drop in CBOT values, SRW cash values lost ground against both HRW and SW. HRW premium to SRW widened this week by $2/MT to 50 cents/bu ($18/MT). SRW nearby cash premium to SW down $2/MT to 42 cents/bu ($15/MT).

Durum sales conspicuously absent from this weeks sales report, explained by the U.S. domestic market trading at a substantial premium to the export market. The price range is widened at the low end with the Lakes program at $5.58/bu ($205/MT) to $5.99/bu ($220/MT).

Barge rates have been very quirky this month with the Mississippi jumping while the Ohio is unchanged for the week. After falling 42% last week, the Minneapolis to NOLA rate rose 32% this week to $40/MT. The rate increase was capacity driven as cold weather and low water levels have decreased draft. Further, traders are reportedly moving as much grain as possible prior to the winter freeze, which appears to be coming earlier than last year. Mississippi rates are 8% to 25% higher than this week last year. Rates on the Ohio were generally unchanged, with decreased movement blamed on the slow corn harvest and a lack of movement in currently 38%($12/MT) below rates paid earlier this month and 12%($5/MT) below year ago levels.

Ocean freight markets turned back up this week after falling for three weeks. Vessel owners have decided to hold out for better prices, betting that import demand for grain will increase despite strong prices. At $39/MT this week, the PNW-Japan rate is up $2/MT from last week and $13/MT (50%), above this week last year. The Gulf routes also rose this week, by $1/MT from last week, remaining nearly equal to levels paid last year. With only 4-6 weeks to go before the Lakes close for the winter freeze, routes from Duluth are showing no sign of weakening, sitting $26/MT (60%) higher than this week last year.

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