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April 13, 2007
(See attached file: PR070413.pdf)(See attached file: PR070413.xls)

Wheat futures were volatile this week as markets speculated on the extent of freeze damage in the Southern Plains and Delta over the Easter holiday weekend. The Kansas crop progress report showed a considerable fall in conditions, supporting price strength. The KCBT locked limit up (30 cents/bu) at the open on Monday but fell back in the same session. Informa Economics commented, "Though vegetative damage undoubtedly occurred, production loss is far less certain and could well be minimal to nonexistent...No quantitative evaluation can be made for several weeks at a minimum and most likely even longer."

All three exchanges hit multi-month lows in the sessions following the prospective plantings report. HRW prices fell to the lowest level since May 2006. The freeze has pushed prices back to trading levels seen prior to the March 30 plantings report. For the week, CBOT SRW nearby (May) futures rose 34 cents/bu, the KCBT ended up 27 cents/bu and the MGE was up 21 cents/bu. Corn futures ended 3 cents/bu higher than last week.

In its World Agricultural Supply and Demand Estimates, released Tuesday, USDA increased its forecast for U.S. exports and domestic feed use, decreasing ending stocks. The WASDE also revised up exports from the Black Sea region while decreasing exports from the EU-27, on tight supply, and Canada due to logistical problems caused by rail strikes. Export sales from last week, at 809,000 MT for both new and old crop supplies, were well above trade expectations of 250,000 to 450,000 MT, also supporting prices.

The freeze event was seen as particularly serious for the SRW crop in southern Missouri and northern Arkansas as the hard freeze came on the heels of 2 weeks of 80 degree rainy days promoting growth. As concerns mount over availability SRW basis is up 11 cents/bu from last week.

Focus renewed on the SRW premium to corn at the CBOT as markets need to buy wheat out of poultry/pork feed rations. SRW futures held a 58 cent/bu premium over corn on March 23, nearly doubled to $1.10 today.

U.S. SW prices rose 15 cents/bu this week to $6.05/bu, less than half of the week's increase at the CBOT, taking 21 cents/bu ($10/MT) off the SW premium over SRW. The discount for new crop SW declined only slightly, with last half June offered at $5.30/bu. The SW supply and demand situation will depend significantly on Australian getting badly needed precipitation before they begin planting in early May as well as how much damage the U.S. SRW crop sustained last weekend.

Barge rates are essentially unchanged from last week with Minneapolis - NOLA at $20/MT, $11/MT (36%) lower than at the November close. USDA Grain Transportation Report cites weaker rail demand from coal and grain shippers for keeping rail rates constrained. At $41/MT rail rates are 10% lower than last year on the North Dakota - Houston (HRS/durum) route while the Kansas City - Galveston rate is 5% higher than this month last year.

Ocean freight rates continue to rise. The Baltic Exchange Panamax Index is at the highest level since 2004. At $46/MT, the PNW - Japan rate is $20/MT (71%) higher than April 2006.

Kansas Crop Conditions Report:

NASS Prospective Plantings Report:

USDA World Agricultural Supply and Demand Estimates:

USW Commercial Sales Report:

USDA Grain Transportation Report:

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