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Corn pollinating in cooler than normal weather

The grains received a slew of news the past week, with the USDA planted acreage and
stocks report and the primary growing season in the US.

The planted acreage
report held few surprises, with a little less corn/soybean acres than expected
and a little more wheat (HRS wheat mostly). So attention once again turned to
the growing 2006 crop and weather, with the corn belt returning to cooler than
normal weather in all regions except the HRS wheat country. So what did prices
do this week?

HRS wheat prices rallied sharply, with big gains due to the declining crop. Pro
Ag yield models dropped in all crops on Monday's condition report, with HRS
wheat dropping by far the most of all crops. The Pro AG yield model implied
over a 1 bu decline last week, with our yield model now suggesting yields 10%
smaller than 'trend', or basically a disaster crop. Although eastern HRS wheat
areas are holding up relatively well (an average crop???), the western HRS wheat
belt may be a disaster area, with temps well above normal and very little if any
rain.

Corn yields also dropped 2.5 bu last week, but with rain and cooler temps this
week its likely all areas but the northwestern corn belt (ND, SD, IA, and MN)
improved this week. That will leave it difficult for corn to rally, especially
with cooler than normal temps and normal/above normal rainfall forecast for all
but the northwestern corn belt the next 2 weeks. Its likely corn will produce
an average crop in 2006, making it difficult for weather to cause higher corn
prices. So it will be left to demand to improve corn prices.

Soybeans still have a few weeks before the critical time frame develops, but
crops are ahead of normal about 2 weeks in 2006, so it's less likely that crop
stress will occur in 2006 than any other year. Last week Pro Ag yield estimates
showed a decline of about one-third of a bushel, but yield potential is still 41
bu, just slightly below trend but above USDA current projections.

The next 5 days
should bring .5-1.5", locally 2-2.5" rains to 90% of KS, NE, MO, and CO that should greatly aid
the growing row crops and improve the crop in this week's crop development. This
accompanies rainfall over most of the rest of the central and southern Corn Belt, HRW Wheat
Belt, and SE US this week and should allow the corn and soybean crops to improve in yield
potential in next weeks crop conditions. The only area that will remain under stress is HRS
wheat areas and the northwestern corn belt (IA, SD, ND, and MN) that will experience warmer
and drier than normal conditions for the next 2 weeks that will cause additional stress to the
crop.

It's becoming apparent that 2006 will go down as the year where we have devastating losses in wheat (10% below trend
yields for both HRS and HRW wheat). But corn and soybeans so far appear to be average crops, with rainfall needed
to turn these crops to above average yield potential.

Corn especially is moving beyond the stages where it can be
adversely affected in southern states, with pollination likely to be over within a week or two. Northern Corn Belt areas
will not have any risk of frost, as most of the country (other than the northeast) is well beyond the normal stage of
development. Most of the Corn Belt is about 2 weeks ahead of normal development due to the excellent early spring
growing conditions, so its likely that less stress than normal will occur at the end of the growing season. It's becoming
more and more likely that corn and soybean crops will be average or slightly above average in 2006.

With wheat at $5 or more, much of the disastrous 2006 growing season weather is already built into the market (or
more), so it's unlikely even with additional stress that wheat will rally much further (with the exception of HRS wheat).
HRS wheat may continue to rally as long as additional crop stress occurs, but without any growing season problems in
corn and soybeans it may find it difficult to hold current price levels once harvest begins.

Pro Ag is bearish corn and
soybeans, but neutral wheat (and bullish HRS wheat) for the time being. Another week or two of rallying markets in
HRS wheat, though, might be all it will be able to sustain, especially if it becomes clear that corn/soybean weather is
cooperative to produce a decent 2006 crop.

The grains received a slew of news the past week, with the USDA planted acreage and stocks report and the primary growing season in the US.

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