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Old and new crop corn outlook is bullish

Historical Price Trends: best odds for the week of March 17, according to
our HPT page are for corn, KCBT wheat and fat cattle. Over the most recent
ten years, odds of 70% for lower corn futures than were they closed on
Friday. Odds of 80% favor a lower close next Friday for KCBT Wheat than
where they closed this Friday. Odds of 90% favor a lower close next Friday
for fat cattle futures than where they closed this Friday. Please see the
HPT page for the complete list.

For The Week: for the week, May corn futures value increased 2%, May
soybean futures value decreased 4% and July CBOT SRWW value increased by
8.8%.

For The Month: Thus far for the month of March, May corn futures value is
near even, May soybean futures value decreased 12% and July CBOT SRWW value
increased by 16%.

Technicals: Old and New crop corn and soybeans and new crop wheat. For the
short term trader, Allendale uses its own unique custom Moving Averages to
monitor price momentum, define key support and resistance levels as well as
advise where key pivot points are located when bulls may turn bearish and
bears to turn bulls. We also include last weeks closing price for the
weekly chartist as we draw closer to the end of the week to anticipate the
possibility for futures to have a positive weekly close or if weakness is
ensuing.

Corn La Nina: according to USDA's meteorologist there have been 8 La Nina
years since 1995. Our question is when La Nina occurs what impact has it
had on yield from USDA's official first new marketing year supply and
demand released in the month of May to the final yield for that same
marketing year. On Thursday we explained the facts are 5 of the eight years
found the final corn yield larger than the initial May estimate. Based on
an average increase in yield of 1.3% Allendale's estimate suggest ending
stocks of 806 million bushels vs Allendale's present estimate of 617
million bushels. 2005 had no change between May and the final yield. 2 of
the 8 La Nina years had an ave reduction in yield of 4.9% and would suggest
2008/09 end stocks of 249 million bushels. Of the two down years, 1995's
reduction was 9.6% and 2000 was down 0.1%. This may likely have something
to do with improving corn genetics. In conclusion La Nina may have a
perception of poor yields when in fact, research suggest odds are 75% of
unchanged to higher yields in La Nina years. Please see the "Of Interest"
page for the associated graph.

Soybean La Nina: the facts are three of the eight years found the final
soybean yield larger than the initial May estimate. Based on an average
increase in yield of 4.3% Allendale's estimate suggest ending stocks of 385
million bushels vs Allendale's present estimate of 357 million bushels.
Five of the eight La Nina years had an ave reduction in yield of 3.9% and
would suggest 2008/09 end stocks of 260 million bushels.

Wheat LaNina: three of the eight years found the final wheat yield larger
than the initial May estimate. Based on an average increase in yield of
6.5% Allendale's estimate suggest ending stocks of 398 million bushels vs
Allendale's present estimate of 321 million bushels. Five of the eight La
Nina years had an ave reduction in yield of 3.1% and would suggest 2008/09
end stocks of 195 million bushels.

Observation: the very latest we have heard is La Nina is still present and
could have effect into summer. If La Nina continues, Allendale's research
suggest the negative impact is likely to be greater on wheat and soybeans
and has odds suggesting a positive impact on corn. This fundamental fact
could provide reason for futures especially in wheat to maintain a healthy
upward bias.

Corn Fundamentals: Bullish to corn is the weak US dollar and lack of global
competition to answer world demand. We do anticipate competition from
Argentina (590 mil bu) and #3 world exporter Brazil (354 mil bu) to surface
by the end of March and mid to late April. Bearish to corn futures is the
heavy weights in the financial markets, many of which are directly or
indirectly involved with grain and oilseeds and its products markets, which
are under a great deal of duress. The feeling at hand is many are having to
take profits out of good trading markets to cover margins in bad markets.

Old Crop Marketing: 5340 cash corn requires 4.1 cents per bu per month to
store on farm. Make certain unhedged corn meets the criteria. Allendale has
its old crop corn hedged in the May futures.

Cash Peak: Dating back to 2000, odds favor a national cash corn peak for
the months of April and May.

Trade Posture: Long term Allendale remains bullish to old and new crop
given our outlook for reduced corn plantings in the spring of 2008.
Allendale bought July corn futures on strong performing fundamental demand
and supportive technicals. We have been raising our risk to protect gains
earned and had the risk triggered on Friday for a positive outcome. It must
be noted the days of old crop stocks on hand, numbers 41, the second lowest
dating back to 1999-2000.

Soybean Fundamentals: Bullish to US soybeans and its product market is the
instability of the on again, off again Argentina export registry. Any end
user is bound to place less confidence in Argentina as a dependable
supplier as long as its government is unstable with regards to is economic
policy. Bullish to soybean futures is tightening old crop stocks as a
result of positive crusher margins and active exports of soybeans and
soybean oil. Bearish to US soybeans is a record Brazil soybean crop of 61
to 62 million tonnes and competition it is expected to place on US soybeans
as the Brazil currency continues to favor aggressive exports.

Old Crop Marketing: at present, Allendale has 70% of its 2007 inventory
hedged in the May futures after rolling out of March futures on 2/13/08 at
a value greater than full carry. $13.28 cash soybeans require 8 cents of
carry per month. If not hedged, make certain your local cash markets are
offering you sufficient carry.

Cash Peak: Dating back to 2000, odds favor a national cash soybean peak for
the months of August, December and April. As we draw closer to the month of
April we will advise on our present hedged inventory options. As we
approach the end of March, we need to be ready to begin selling old crop
inventory, possibly in front of the March planting intention report.

Trade Posture: Allendale is bullish to soybean, soybean meal and soybean
oil futures based on firm domestic fundamentals. Allendale has written
fresh orders to buy soybeans, meal and soyoil on a stop above technical
resistance.

Wheat Fundamentals: News developing that German wheat supplies may be
filling original US sales to Ecuador. Talk is this may become a notable
trend. US sales to the Middle East may be filled by European Union
supplies. Germany may be filling Algeria's need for 100,000 tonnes of
wheat, after it was announced on Wednesday Algeria canceled the original
purchase with the USA. What are the implications? If the old crop wheat is
not needed at the US Gulf or Pacific Northwest to fill the orders Allendale
anticipates an easing of basis at port facilities and ultimately into the
country elevator sector. This weakening could also pressure new crop basis
on ideas of increasing old crop end stocks.

Old Crop Marketing: Allendale sold the balance (50%) of its 2007 inventory
on 2/12/08 as a result of historical research and timing of last trade for
March options first notice day for March futures. $11.20 cash soft red
winter wheat requires 7 cents of carry per month. There is no carry at the
US Gulf in its CIF bids from March to May, like wise for the Texas HRWW
Gulf bids. US Gulf bid for old crop for March delivery is $13.27/bu, for
May delivery $11.65 for July delivery $11.55. See how quickly old crop may
become new crop discount prices?

Cash Peak: Dating back to 2000, odds favor a national cash wheat peak for
the months of Dec and March.

Trade Posture: Technically the new crop trend is up for KCBT and CBOT. Our
long objective for KCBT July wheat was achieved on Tuesday. Long term,
Allendale remains supportive to new crop wheat futures based on how weak
2008 winter wheat conditions went into dormancy. Allendale is technically
bearish to MGEX July wheat futures. The days of old crop stocks on hand,
numbers 37, the lowest dating back to 1999-2000.

Anticipating the March 31st USDA Prospective Plantings Report
CME Group Grain and Oilseed contracts are experiencing unprecedented
volatility and price levels. In addition, tight stocks and uncertainty over
2008 crops in the United States make the March 31st USDA Prospective
Planting Report a critical factor for prices in the near term.

Lean Hogs: The lean hog index, the cash hog measure futures are settled
against, will come out at $53.97 on Monday. April futures settled down to
$55.02 today. Some contracts hit limit down and the April settled just one
tick off it. Wholesale prices are still pushing lower. For the week the
pork cutout dropped $2.27. For today's action the sharply lower futures was
a surprise. However it does fit into our general bearish attitude we have
held. We are covered on 75% of expected marketings from May through
December and have 25% coverage on the February 09 contract. The other piece
of news out which may have had an impact was USDA's sow slaughter total for
the week ending Mar 1 (two weeks ago). It indicated the sow kill was 10.5%
higher than a year ago. On the liquidation issue we need 10% higher to
remain for two months to say it has been meaningful. We do have to wonder
if the uneducated Wall Street money believes liquidation numbers are
bearish for the near term. It sounds bad but realistically sows make up
such a small part of production that a 10% increase in the sow kill should
not make a noticeable impact on prices. Let's wrap this up and keep it
simple. In the big picture this week was significant in that it confirmed
our long term bearish stance. Summer futures, which had been equal to or
were higher than 2007 prices are now equal to or lower than 2007 prices.
The October and December which were at ridiculously large premiums to 2007
prices are now at very large premiums. There should be further to go for
all these deferreds.

Beef Demand: The big hubbub in the cattle market right now is with demand.
In times of uncertainty people eat less high priced beef. There are less
vacations and business trips where high end steaks are purchased. At the
grocery counter the food buyer may switch to a lower priced beef cut or
either switch to poultry or pork. Data from 2007 showed even with the big
jump in energy prices and sub-prime problem demand actually increased. Data
for the month of January showed no significant change. Choice beef prices
were up 4.1% and fresh beef prices (includes choice and select) were up
5.0%. Today the government released February retail prices for beef. There
was some weakening to note but not a panic situation at all. Choice in
February was up 3.4% and fresh was up 4.7%. February CPI (inflation) was
4.0% and Food and Beverage was 4.5%. Taking inflation off those retail
prices shows deflated retail prices about even or just under last year's
level. Given the level of beef supply we would estimate demand is running
around 1% lower than last year right now. That is not great but is no where
as bad as the market is trading. We favor monitoring demand at the consumer
level. However, the wholesale level can be important to monitor as well. On
that side the choice/select spread can be important to watch. Six weeks ago
it was completely normal with an $8 premium to choice. Today it closed just
over even. In other words, the wholesale market is seeing a drop in orders
for high end beef and an increase in lower priced select demand. We had
noted since the first of the year we had not seen a drop in demand. Now we
are seeing it.

Beef Supplies: There is no problem with supplies yet. Slaughter levels have
averaged around 1% higher for the past six weeks. Those totals will start
to grow in mid to late April, in both actual numbers and in percentage of
last year terms, as the extra winter placements first start to show up.
Those extra slaughters will hit hard in May, June, and July. You may have
also been hearing about weights. Carcass weights are 15 lbs higher for
steers and 20 lbs higher for heifers. That sounds bearish but keep in mind
that is compared with last year's winter damaged cattle. Last year weights
were sharply below 2006 levels from February into June. We are actually
running below 2006 weight levels. Overall we are not concerned about near
term beef supplies.

Live Cattle Pricing: We had said before that are main concern with the live
cattle futures pricing structure is with the summer June and August
contracts. We will have more beef being produced during that time than last
year. Based on that alone we simply could not see how June futures were
trading at $94. Last year the June expired at $85.50 and cash cattle traded
down to $86. Prices for June and August futures should end up equal to or
lower than the same 2007 contracts simply based on the extra production
this year hitting in the summer. Our downside target, at the very least,
had been $90 for the June. Now it would appear we will have less demand. We
will certainly admit we did not see the recent price break on the April. We
are 100% covered for marketings from May through August using the June and
August contract. We will hold those hedges. Now we have to wonder if our
downside target on June should be something like $82 to $85....Rich
clear...we are bullish for the long term (October and beyond) and letting
the ridiculous economy fears play with the near term market. April is
undervalued but we still are not touching it. The June contract is doing
exactly what it should be which is falling. We are holding hedges in the
June and August. For trading we still like the long side of October or
December.

Allendale is registered with the CFTC and NFA and is a member of the NIBA.
The bottom line is we are a regulated firm which can be extremely important

Historical Price Trends: best odds for the week of March 17, according to our HPT page are for corn, KCBT wheat and fat cattle. Over the most recent ten years, odds of 70% for lower corn futures than were they closed on Friday. Odds of 80% favor a lower close next Friday for KCBT Wheat than where they closed this Friday. Odds of 90% favor a lower close next Friday for fat cattle futures than where they closed this Friday. Please see the HPT page for the complete list.

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