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November 17, 2006

(See attached file: PR061117.pdf)(See attached file: PR061117.xls)

Futures prices were mostly lower this week. The CBOT fell hard on a technical correction and a very weak export sales report. CBOT nearbys fell 16 cents/bu for the week and are 54 cents/bu ($20/MT) lower than this week last month. KCBOT nearbys were nearly unchanged and the MGE was 5 cents lower. Traders believe importers are generally covered through December, but are optimistic that importers will put on some '07 coverage if futures fall again next week.

Ukrainian forecasting firm UkrAgroConsult is calling for an increase in Ukraine's winter wheat acres from 5.1 to 5.8 million hectares (13% ), leaving acreage well below the 6.3 mha planted for the 2005/06 harvest. Last fall, Ukrainian farmers reduced winter wheat plantings due to dry weather and low prices.

Forecasts from Global Insight peg U.S. all-class planted area at 24 mha, a 4% increase from last year, and winter wheat sowings to expand from 16.4 mha to 17, also a 4% increase. Durum acres are forecast to rise 11%.

Drought continues to adversely affect HRW fields in northern Oklahoma and the southern tier of Kansas according to the NASS weekly crop weather report. HRW belt expected to be mostly dry with above average temperatures for the next week to 10 days. Soil moisture has depleted rapidly over the last 2 weeks in Kansas with moisture at 15 year lows. On the bright side, forecasters expect a moderate El Niño event this year, which tend to provide more than average moisture in the Southern Plains, particularly from December to March. To see the climate prediction map click here.

Eastern North America has had far too much moisture. SRW planting and emergence in the Eastern and Northern Corn Belt (Ohio, Michigan, and Indiana) are slow this year due to the cold, wet conditions. Farmers in Ontario producing CESRW have it worse, only able to get 50% of the intended acreage planted with conditions severely hampering the crop that did get planted.

HRW nearby basis premiums have firmed this week while deferred deliveries fell off for both SRW and HRW to compensate for the futures spread.

HRW nearby cash premium to SRW was up by 20 cents/bu this week to 65 cents/bu ($24/MT). SRW nearby cash premium to SW down 11 cents to 24 cents/bu ($9/MT).

Barge rates fell for the second straight week. The Minneapolis to NOLA rate fell 9% this week to $31/MT, 23% below two weeks ago but 21% higher than last year. Rates on the Ohio were 6% lower than last week. The Cinncinnati - NOLA rate is $18/MT, 5% higher than rates paid this month last year. USDA's Grain Transportation Report shows that rail rates in the secondary market have fallen for the past 2 months. The tariff rail rate for Minneapolis - Portland at $1.15/MT, is even with last year while North Dakota - Houston $1.36/MT is 10% above last year.

Ocean freight finally eased this week with the PNW and Lakes ports down $2/MT. Pacific rates are currently over 80% higher than February '06 and 66% higher than last November. Rates out of the Lakes are 64% higher than last year, trading at wide spreads. Gulf routes have been stable through November, equal to levels paid last year. Traders are expecting the U.S. Thanksgiving holiday next week to dampen rates in the Atlantic. Some vessel owners in the Lakes are reportedly refusing to go to Duluth, prefering to ballast out to the seaway than chance getting stuck in the ice.

Because USW will be closed next Thursday and Friday in observance of Thanksgiving, the Price Report will not be sent next week.

USW Commercial Sales Report:

NASS Weekly Crop Weather Report:

NOAA El Niño Precipitation Distribution Map

USDA Grain Transportation Report:

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