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May 4, 2007

(See attached file: PR070504.pdf)(See attached file: PR070504.xls)
Wheat futures lost ground to corn all week after the USDA crop progress report showed corn planting progress way behind average while HRW conditions improved and HRS plantings caught up to average. Corn plantings are 23% completed, significantly behind the 48% five-year average due to fields staying too wet for planting. More rain is forecast for the corn belt this week. Although conditions in the HRW region improved significantly, SRW conditions are concerning with major states Missouri, Illinois, Indiana, Ohio and Arkansas all showing single digit (or zero) percent of the crop in excellent condition.

For the week CBOT July futures fell 18 cents/bu, the KCBT ended down 17 cents/bu and the MGE was off 16 cents/bu. Corn futures rose 17 cents/bu from last week. For the second week, all nearby basis prices are quoted over July delivery futures prices.

The Wheat Quality Council's Kansas crop conditions tour concluded Thursday, projecting the top HRW state's 2007 production at 10.7 MMT. If accurate it will be a 35% increase over last year's 7.9 MMT production.

Rains in Australia and the European Union improved conditions there, but more precipitation is needed. Canada is too wet, having difficulty getting into fields, as is Oklahoma - the second largest HRW state - starting to get some disease pressure.

SRW basis rose again this week on trader concern over lower production on the freeze. August/September offers are much stronger this week as barge futures go higher.

SRW futures are now trading at a 10 cent premium to HRW (July delivery), HRW at a 94 cent/bu ($35/MT) premium to corn down from $1.35 cent/bu ($50/MT) last week. The SW premium over SRW moved up $2/MT to $34/MT (93 cents/bu).

Ocean freight rates leveled off this week with rate estimates unchanged in the Atlantic and Pacific up $1/MT after a $3/MT jump in both markets last week. All the familiar reasons credited for the historically high rates - ie. Chinese mineral demand - with no relief expected in the near future.

Barge rates weakened for the fourth consecutive week.

NASS Crop Progress Report:

Wheat Quality Council:

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