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March 2, 2007

Futures markets were very volatile this week as speculative funds repositioned in fits and starts. The funds reacted to the Dow Jones falling by more than 400 points, the seventh largest single day decline in history, when China threatened to implement capital controls.

Nearby deliveries at the CBOT finished the week down 25 cents/bu from last week while the KCBOT fell only 2 cents as HRW has a much higher potential of being fed. The cattle producers in western Kansas have already started including HRW in feed rations while the pork and poultry producers in the eastern U.S. appear reluctant to switch over to SRW. The MGE fell 15 cents/bu, but made up more than 4 cents/bu against corn.

All basis prices are now quoted and reported over May futures prices.

The HRW premium to SRW way up this week to $1/bu ($37/MT).

Reports of the Canadian rail strike leading to increased HRS basis prices were apparently overstated. Basis prices reported unchanged in both the Lakes and Gulf from last week.

The SW premium to SRW shot up 24 cents/bu this week to 64 cents/bu ($24/MT) as the vacuum for white wheat left by Australia in Asia becomes more evident.

Barge rates fell off this week, down $2/MT (12%) on the Illinois River but only 2% on routes down the Mississippi. Rates are now 17% to 28% ($2-3/MT) lower than this week last year.

Ocean freight rates climbed significantly this week as the South American soybean harvest surges along with strong mineral and iron ore demand. The panamax daily rates are up by 15% from two weeks ago, from $38,500 to $44,000 this week. Rates by metric ton are estimated up $5/MT in the Atlantic while rates in the Pacific are up $1/MT.

(See attached file: PR070302.xls)(See attached file: PR070302.pdf)

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