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History shows corn exports slow to end the year

Bullish to corn futures are a stronger than typical
export pace, 42% above year ago levels and at 951 mil bu, 33% higher than
the most recent three year ave of 713 million bu.

Also bullish to the corn market is last week's announcement
by India that it plans to officially ban corn exports, a three yr ave of
12.44 mil bu. Demand from ethanol continues to compete with other domestic
use as well as exporters creating steady to firming basis levels (Dec
Delivery at the Gulf hit a yearly high for this time of year at 68 cents
over Dec futures), in part because of corn going to storage and not across
the scale. Bearish to corn futures is the weak crude oil market and signs
of domestic price rationing, most evident in the feeder cattle futures and
chick and egg data ( see most recent chick and egg data below).

Weekly Export Sales: Sales of 41 million bushels for the week ended Nov
16th compares to pre-USDA report estimates of 43.3-55.1 mil bu. Sales were 25%
below the previous week and 23% below the most recent four week average.
The amount needed on a per week basis for the balance of the marketing year
is 30.71 mil bu. Five year history suggest corn export sales performance
slides by two thirds into the end of the calendar year and then makes a
impressive correction as we enter the early stages of the next calendar
year. Provided the world circumstances of impressive demand and short
supplies, it is our advice we are unlikely to see a similar pattern going
into the end of 2006.

Broiler Egg Set: This next section is becoming a very serious problem for
corn and soybean meal use. Broiler egg set was down 3% vs year ago levels
for the same week of the year. Over the last five weeks, egg set has been
down 3%, down 2%, down 3%, down 3% and this latest 3% downward move. Why is
that important? Because poultry is the largest consumer of soybean meal and
2nd largest user of corn when analyzing the feed use sector of the monthly
WASDE reports. Eggs in incubators for broilers are now 207,577,000 vs
212,945,000 one year ago for this week of the calendar year. Broiler chicks
placed are now 155,987,000 vs yr earlier levels of 162,967,000.

CFTC/Corn Price: According to our "Special Reports" section within our web
site suggest funds are very toppy with its extended combined futures and
options long position. Also not how price is very tightly bonded to the
rise in long positions based on projected tight end stocks. This is very
unlike a year ago when projections were more than double for end stocks.
Take a good close look at the beginning of 2004 when end stock projections
were very close to present projected 2006-07 end stocks. Even with thoughts
of tighter than usual end stocks, fund found a reason to liquidate
positions in the late winter, early spring time frame. The one huge
difference for the upcoming time frame very well could be the funds
attraction to ethanol demand.

Cash Corn: The Dec-Mar corn spread is at 16.6 cents carry. At $3.47 spot
cash prices, the cost of carry is 4.2 cts per bu per mth or 12.7 cents.
Anything less than 12.7 is a warning flag to move cash corn. As you work
through your harvest, you might have a much better idea if there is
sufficient storage on farm. If not, we would strongly advise to sell
surplus bushels into the cash market when the spread strengthens to 12.7 or
more. We fully anticipate futures and cash to work higher into the
March-April time frame. This present spread level is not indicative of a
short supply situation.

Corn Technicals: March futures close is 3860 vs last Friday's 3704 and up
15% thus far in the month of Nov. Our key custom Moving Averages are 3750,
3720 and uses a 2840 bull to bear pivot point. July futures close is 3944
vs last Friday's 3760 and up 13% thus far in the month of Nov. Our key
custom Moving Averages are 3810, 3790 and a 2960 bull to bear pivot point.

Trade Position: We are willing buyers of corn futures but on a pull back.
Tight world stocks, no next new supply of corn until Argentina harvest in
March 2007. We remain aware of the fact of early warning signs of economic
rationing as outlined in the poultry section above.

Ethanol: Technically, ethanol is immediately trending higher. Key technical
resistance is 2.17 per gallon for Jan futures while key support is 2.09 per
gallon, tonight's close 2.125. Fundamentals are bullish if you are
processing ethanol as there remains positive profit margins, even with
$3.50 per bushel feedstock input and $116 per tonne DDG by product feed.
However in the background we are very aware of the building stock levels of
ethanol. The very latest Energy Administration data has monthly production
of 10.2 million barrels vs 8.1 a year earlier and stock levels of 9.2
million barrels vs yr earlier levels of 5.2 million!

Thanksgiving Study: The question has been asked, typically how does the
March corn futures react during the Thanksgiving Holiday time frame? The
results are as follows; since 1997, March corn futures have lost ground 8
of the 10 years when measuring the closing price from the trade session
before the day of Thanksgiving to the closing price the day after
Thanksgiving. More specifically the ten year ave has found futures slipping
1.7 cents. The most futures lost ground was .052 in 2002, with its smallest
loss of .012 in 2005. The two years futures actually gain ground was the 1
cent made in 1999 and the three quarters of a cent made in 2001. Of the
eight years of losing ground, the average loss was .022 while the ave gain
the two years it did close higher was by nearly 1 cent.
It may be interesting to note that in the 2003-04 marketing year when
projected end stocks were similar to present projections, March corn
futures lost 1.5 cents. Odds suggest a lower close on Friday at noon vs
Wednesday's noon close. Historically the range has not been very great.

Soybean Fundamentals: Weekly export sales for soybeans and soybean meal are
bullish when compared to pre release trade estimates. The majority of the
headlines focus on soybean oil for fuel and food use. Interesting to not
how a key soy diesel player in Brazil has announced plans to build a 10
million liter per year soybean oil diesel plant have been put on hold
because of the high input cost of soybean oil. USDA suggest a close
breakeven to use soybean oil for bio diesel is 30 to 31 cents and or $2 at
the pump price for diesel fuel. S American weather is said to be mainly

Soybean Meal Chart: Our Allendale Advanced Charts suggest immediate
resistance for Dec soybean meal is 1977 while underlying support is a
longer term up trend of 1925. Good news for soybean meal is how export
sales thus far in the marketing year are 35% of USDA's export target, and
1% above last years pace. However after the first six weeks, sales are
lagging the five year ave by 9%.

Soybean Crush Margin: Within our Special Reports section of our web site
you will see how crushers are in full production mode after reaching its
gravy point after this most recent summers sell off. Full crush mode
remains a key supportive value for cash soybeans.

CFTC/Price Chart: Our custom data does show how non commercials combined
futures and options position does in fact have a great deal more room to
move higher before ploughing into recent historical resistance levels of
near 80,000 long contracts. Another point to take in is how with big end
stocks projections, funds positions are not impacting cash as closely as
are the wheat and corn. This may suggest when combined volume and open
interest begins to slip, the ride downward on soybean futures may be much
more accelerated than the corn and or wheat.

Cash Soybeans: The Jan-Mar futures spread is 12.4 cents. With the spot cash
market at $6.37 per bu, cost of carry per mth is 6.5 cts/bu/mt or 13 cents.
If the cost of carry is below the spread, it signals to move soybeans to
the cash market. Use this present rally to sell any small overages which
will not fit into your on farm storage. As long as corn futures continue to
trend higher and pull soybeans higher we will hold off to announce to sell
the 2006 soybean cash crop.

Soybean Technicals: Jan futures close is 6842 vs last Friday's 6604, up 6%
thus far this month. Our key custom Moving Averages are 6680, 6670, and has
bull to bear pivot point of 6130. March futures close is 6966 vs last
Friday's 6744, up 6% thus far this month. Our key custom MA's are 6800,
6790 and bull to bear pivot point of 6210.

Weekly Export Sales: Weekly export sales of 29.5 million bushels were
better than pre release estimates of 18.4-29.4 mil bu. The amount needed on
a per week basis for the balance of the marketing year is 14.38 mil bu.
Cumulative sales of 570 million bushels are 42% better than year ago levels
and compare to a three year ave of 529 million bushels.

Trade Position: We are willing buyers of soybeans on a technical pullback
and as long as corn futures continue to stay in its up trend. We are at
present long both the Jan and March soybean futures with risk and
objectives outlined within our Grain Trading Strategies page.

Wheat Fundamentals: Japan bought 36% more wheat in its weekly tender than
it traditionally does. Egypt bought 60 K tonnes USA wheat and 120 K tonnes
of French wheat on Wednesday. S Korea is tendering for 50 K tonnes of USA
wheat. An announcement is expected very soon regarding the dissolving of
the Australian Wheat Board. How does that impact the world wheat market, it
simply places more competitors open to demand and could continue to
pressure US wheat value. It also allows multi national giant grain
companies such as ADM, Cargill and Bunge to finally plant themselves in
what has been for 60 years, a single desk sales authority.

Wheat Exports: Sales are miserable. Sales thus far in the marketing year
are running 19% below yr ago values. At 526 million bushels, they are 22%
behind the three year ave of 677 million bushels. When looking at our
export sales special report within our web site you can clearly see how
after the month of February, sales begin to erode quickly.

CFTC/Price Wheat: Within our Special Reports section you will quickly see
how the non commercials combined futures and options ran into a brick wall
and despite the tight stocks projections, are in retreat mode. How much
further downward? If history repeats itself, even in 2003-04, funds could
take its position to a neutral position before pausing. Entering this
mornings trade, floor traders estimated non commercials net long position
at 35,900 contracts. The key point here is as price is sensitive to the non
commercials position because of the projected tight stocks, price may not
be able to support itself when funds continue to press lower.

Cash Wheat: The Dec-Mar CBOT spread is at 19 cents carry. At $4.45 spot
cash prices, the cost of carry is 5 cts per bu per mth or 15 cents.
Anything less than 15 is a warning flag to move cash soft wheat. The
Dec-Mar KCBT spread is at 16.6 cents carry. At $4.60 spot cash prices, the
cost of carry is 5.1 cts per bu per mth or 15.4 cents. Anything less than
15.4 is a warning flag to move cash hard wheat. The Dec-Mar MGEX spread is
at 14 cents carry. At $5.50 spot cash prices, the cost of carry is 5.8 cts
per bu per mth or 17.5 cents. Anything less than 17.5 is a warning flag to
move cash spring wheat.

Wheat Technicals: March CBOT SRWW futures close is 5190 vs last Friday's
4940 and up 3% thus far in the month of Nov. Our key custom Moving Averages
are 5050, 5010 and 5080. March KCBT HRWW futures close is 5376 vs last
Friday's 5294 up 1% thus far in the month of Nov. Our key custom Moving
Averages are 5310, 5300 and 5340. March MGEX spring wheat futures close is
5234 vs last Friday's 5120 and up 3% thus far in the month of Nov. Our key
custom Moving Averages are 5150, 5160 and 5170.

Trade Position: we remain long MGEX July wheat while reaching our long
objective in the CBOT and KCBT July wheat futures as described within our
Grain Trading Strategies page. Tight world stocks, shrinking Australia crop
and no new supplies until India begins to harvest next March are all
bullish to wheat futures. New crop July wheat futures are expected to
sensitive to winter kill stories throughout the world in the coming months,
unlike the old crop Dec wheat futures which are reacting accordingly to
poor export sales performance. World Weather Inc has forecasted this
seasons first major winter cold blast with high winds expected this week!

Allendale Lean Hogs: In the big picture, slaughter levels are running about
as expected and weights are not a big issue. The key here is pork demand.
On that side, we are not looking for any significant changes into the end of
the year. For 2007, we are still concerned 3% more pork production and only
a moderate jump in exports will cause some price pressure to develop.
Currently, futures are trading near 2006 levels. More pork and the same
prices is a hard one to take. In the near term you could argue on a chart
basis the December may try to finish filling that gap up to $62.90.

Allendale Live Cattle: A quiet trading session was seen at the CME today.
Last week, cash cattle traded $87 to $87.50 which was steady to 50 cents
higher from last week's closing trades. This week, cash cattle are expected
to trade sideways at values of $87. Packers are expecting the period from
Thanksgiving to Christmas to be a decent demand time for beef. While that
is good news we still have to caution against being too optimistic here. It
would look for cash cattle to trade in a range from $86 to $88 for the next
few weeks. The current December futures quote and normal basis levels has
the same level dialed in. In the big picture, we would like to be bullish on
this market but just don't have the fundamentals backing it up... yet. For
seasonals, typically spring futures make a significant bottom around the
second week of December then rally all way through March or so. With the
expected heavy first quarter slaughters and lighter than usual summer
slaughters (due to low placements which are starting) we may look instead
to buy the June or August futures rather than the February or April.

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
in this day and age.

Bullish to corn futures are a stronger than typical export pace, 42% above year ago levels and at 951 mil bu, 33% higher than the most recent three year ave of 713 million bu.

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