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December 28, 2006

(See attached file: PR061228.pdf)(See attached file: PR061228.xls)

Highlights
After some very beneficial precipitation last week, the Plains are expecting another winter blast of snow and rain today through the weekend that should continue to boost soil moisture levels and help prospects for the new crop. Click here for the NOAA 5-day precipitation forecast. During El NiƱo weather events, increased winter precipitation in the southern and western Great Plains is expected.

Favorable weather combined with continuing slow exports has left only the corn/wheat spread to move futures markets. After a week of volatile though thin trade, CBOT SRW March nearbys are up 1 cent/bu from last Thursday and the KCBOT up 4 cents. Spring wheat has a lot to lose in the fight for acreage, but the MGE is losing ground, up only 4 cents with corn up 11.

SRW basis prices crashed last week and has stayed low on weak barge rates and limited export interest, nearbys still offered at a 25 cent premium.

North American HRS acreage for the coming year may be in trouble. The recent rally in oilseed futures - soybeans up +20 cents/bu over the last week as floods in Indonesia put palm production at risk, rising durum and barley prices and high corn prices will give farmers lots of lucrative planting options this year. HRS basis prices out of Duluth at the spring open (April) came down this week, making cash prices look like a good value.

Barge rates on the Mississippi fell another 12% this week to $15/MT, compared to $34/MT in October. Routes on other rivers were generally unchanged to lower. Rates on the Illinois and Ohio rivers are down 38 to 47% ($5 to $8/MT) from last year and 55 to 65% down from October 2006.

HRW premium to SRW rose slightly again this week to 53 cents/bu ($19/MT), still much lower than the 78 cent/bu premium hit a month ago. The SRW nearby cash premium to SW fell again to to 23 cents ($9/MT) as prices on the west coast moved up.

The ocean freight market moved sideways this week for most routes. An agreement on iron ore pricing between China and Brazil has many freight market observers expecting a substantial rate increase during February and March 2007. Others believe the anticipated effects of the agreement may be exaggerated.

To access the NOAA 5-day precipitation forecast, paste this address into your web browser:
http://www.hpc.ncep.noaa.gov/qpf/p120i12.gif

File Name
PR061228.pdf
PR061228.xls
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