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March 30, 2007
(See attached file: PR070330.xls)(See attached file: PR070330.pdf)

Today's initial USDA estimates for spring planted crops were seen as neutral for wheat prices. Farmers reported that they expect to plant 7% less non-durum spring wheat this year... compared to trade estimates that predicted a 6 to 15% fall. The decline in spring wheat partially offsets a 10% increase in winter wheat and 6% increase in expected durum acreage, resulting in a 5% increase for all wheat classes.

Wheat futures are reportedly following corn, and the USDA report calling for a 15% increase in corn acreage, a 5 million hectare increase over 2006, caused a huge selloff in the corn pit. CBOT corn locked limit down (20 cents/bu) at the opening bell, sending bears to wheat futures which caused all three wheat exchanges to fall by 15 to 20 cents/bu today. For the week, CBOT SRW nearby futures 24 cents/bu. The KCBT is down 28 and the MGE ended down 17 cents/bu. CBOT corn fell 29 cents for the week.

A pair of Attache reports from USDA show diverging situations anticipated for the Southern Hemisphere. Assuming a return to normal weather in Australia yields a rebound in production from 10.5 MMT this year to 22.1 MMT in 2007/08. Despite greatly diminished soil moisture levels and dramatically cut supplies of irrigation water resulting in constrained yields, high grain prices will lead to higher planted area, resulting in a forecast 17% increase in area harvested. Production in Argentina on the other hand is expected to decline on decreased planted area as government market intervention has lowered domestic prices while international prices continue to soar.

India confirmed that they will permit duty-free imports through this calendar year.

Weather in the Southern Plains is looking very promising for a huge HRW crop. The only area that could improve is north central Oklahoma/south central Kansas and they are getting 3-8 inches of rain through Sunday.

New crop protein premiums, beginning in June for winter wheat and August for spring wheat, are now being quoted. June ordinary protein HRW basis is 23 cents/bu ($8/MT) cheaper than May.

Durum prices fell off considerably this week as traders aggressively bid for export business. The first Lakes quotes of the year range from $6.12 to 6.80/bu ($225 to $250/MT) for number 1 specifications. The premium for Gulf origination is 83 cents/bu ($31/MT).

U.S. SW prices fell today with the other markets, allowing SRW to regain some ground. At $5.86/bu ($215/MT) the SW premium to SRW is at $1.43/bu ($53/MT).

Ocean freight rates bounced back this week, erasing all of last week's decline. The South American harvest continues to provide demand, along with the standard China/India vacuum, keeping rates at multi-year highs. Pacific Ocean rates are back up $1/MT from last week, pushing rates for shipments from Portland to Japan $18/MT (69%) higher than this week last year and $9 (25%) higher than last month. Rates in the Gulf are up $2/MT from last week, 81% higher than last year and 20% higher than last month. Unfortunately, Laker vessels remain extremely expensive as the first grain of the Lakes season was loaded this week. Freight indications for Duluth to Italy at $74/MT are equal to rates at the Lakes close last December, $31/MT (72%) higher than April 2006.

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