Allendale grain wrap-up, Aug. 21

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.

Corn Fundamentals: corn inspections slipped enough to suggest with two weeks remaining to report for the 2005-06 marketing year, we will fall short of USDA export target of 2.1 bil bu by approximately 36 million bushel. Another downer in the works is how China's buyer of a first cargo of corn says they will postpone the second planned cargo until 2007. This is likely to temper some of the bullish enthusiasm for those who are tunneled visioned on China as a key buyer of U.S. corn for the 2006-07 marketing year. Positive developments are strong domestic use of corn from the feed and fuel sector as well as anticipated strong exports in the next marketing year. And trying to satisfy this demand with projected end stocks 10 MMT less than in 2003. At 93 MMT global stocks, we have to venture back to 1983 when stocks were only 83 MMT.

Corn Technicals: Sept futures close is 2210 vs last Friday's 2196. Our key custom Moving Averages are 2210, 2260 and 2450. Dec futures close is 2374 vs last Friday's 2356. Our key custom Moving Averages are 2380, 2430 and 2500.

Trade Position: Fundamentally the U.S. corn crop grew from the July to Aug time frame and expected to grow into the Sept WASDE. However as the technicals suggest above, the technical trader is poised for a short covering rally by breeching or poised to breach the first of key momentum levels. Thus we have entered orders to buy Sept and Dec corn as outlined in out Grain Trading Strategies page. A supportive reason for our willingness to buy corn is found in the wheat section below.

By The Way: has anybody else noticed how quickly Japan returned to accepting U.S. beef imports since the glitch with the less than desired quality standards in the shipment of beef from NY? And now S Korea appears poised to re start beef imports from the United States. And the last time Japan was a willing buyer of U.S. beef? It was when U.S. and global stocks of corn and wheat were tight back in 2003-04. It appears as though when grain stocks are tight, these buyers are more than willing to by the finished product from the United States rather than pay higher prices to finish its own beef. It also allows Japan and S Korea to buy the finished product of beef rather than have to compete with the ethanol industry which could place a damper on the FULL potential of U.S. corn exports in 2006-07! What do you think, sound plausible?

Week 2 and the last week for the 17th annual Allendale Crop-Yield Survey! Over the past 17 years, thousands of . farmers have contributed to this national survey. We need your help again! Participate in the survey today, and have the results e mailed directly to you after 7:30 am on September 1, 2006. You can also see the results on the Morning Calls page of the Allendale Web site. If you have questions, please contact Joe Victor by E-mail at jvictor@allendale-inc.com or call your Allendale representative at (800) 551-4626. www.allendale-inc.com

Soybean Fundamentals: going into the last two turns of the 2005-06 marketing year, our research suggest the United States is very likely to meet the USDA target for 930 million bushels of soybean exports. Today's soybeans inspections, see Export Demand page helped to bring the reality that much closer as inspections for the week ending Aug 17th were rock solid. On the bearish side of soybean futures is a 2006 crop which based on crop growing in size from the Aug WASDE to the Sept WASDE. Longer range forecast to not show any large signs of threatening weather and projects unusually large old crop and new crop soybean stocks.conditions.

Soybean Technicals: Sept futures close is 5482 vs last Friday's 5470. Our key custom Moving Averages are 5610, 5650, and 5700. Nov futures close is 5612 vs last Friday's 5604. Our key custom Moving Averages are 5650, 5690 and 5700.

Trade Position: because old crop stocks projected to be 81% larger than the most previous four year ave we are more willing to sell a corrective rally for Sept soybean futures. However as technicals look brighter for new crop soybeans, we are willing buyers at the stop level outlined within our Grain

Trading Strategies page.

Wheat, Destined for Production and End Stocks Disaster?: or are we already in the thick of a development which looks to send world and U.S. stocks into a tighter situation than we had in 2003 into 2004? There are two of the four major export competitors of the United States, which are entering the key grain filling stage of wheat development. They would be Australia and Argentina. Of the five major wheat exporters of the world, the United States ranks 1st, Canada second, Australia number three, EU-25 fourth and Argentina fifth. We are all aware of the disappointing wheat production in the United States, but as the number three exporter Australia and number five Argentina work towards filling the grain kernels, both have weather issues which need to be monitored. Plain and simple, Australia appears to

be headed towards a disaster as thus far this season all of its wheat country regions have had less than 50% of its normal precipitation. In Argentina the good news is its #1 producing region of Buenos Aires is near 100% of normal rains. Its number 2 producing region of Cordoba is 75 to 100% of normal rains but is number three producing region of Santa Fe less than 50% of normal. Simply stated a two very key links in producing a wheat crop for harvest are wearing thin and suggest USDA Sept WASDE report is likely to ratchet down global end stocks. At present projected global stocks of 128 million metric tonnes are comparable

to 2003 stock levels of 132 MMT, but we would have to venture back to 1981 to find lower levels which were 113 MMT. With India and Brazil discussing the possibility of importing wheat from non traditional sources, we may be witnessing the very first signs of the demand sector growing very uneasy about not just price levels but actually sourcing the physical wheat. We have entered orders to stop into long Sept futures because of these developments and what past history has taught us about timing. Yet another reason for entering longs for KCBT and CBOT wheat is the evolving technical picture, see below.

Wheat Technicals: Sept CBOT SRWW futures close is 3656 vs last Friday's 3644. Our key custom Moving Averages are 3660, 3740 and 3840. Sept KCBT HRWW futures close is 4536 vs last Friday's 4542. Our key custom Moving Averages are 4520, 4550 and 4710.

Sept MGEX spring wheat futures close is 4464 vs last Friday's 4484. Our key custom Moving Averages are 4620, 4640 and 4680........Joe Victor

Allendale Lean Hogs: It would appear cash hog prices, and CME futures, could rally through Wednesday or so. Packers have orders for the product but market ready hog numbers are not coming in as expected. The talk is after a few days packers will be past supplying the Labor Day market prices could break. We have noted our expectations of a trend change to lower prices coming. Until the numbers return to normal those plans have to be put on hold. For speculative trades we would not recommend fighting this trend with short futures. Instead it would be better to watch the December/October spread.

Allendale Live Cattle: As noted in the morning comments a South Korean official noted U.S. beef may be in South Korea in October assuming the upcoming inspections of U.S. plants are completed without a hitch. That was the key driver for today. Cattle on Feed was mostly neutral. We do have to note wholesale beef prices dropped in both choice and select offerings for the second day in a row. This will certainly make it hard for the trade to expect steady cash cattle sales. Instead we could push $1 lower for a week or two as happens seasonally. In the short term we would suggest looking at bear spreads such as buying December/selling October or buying February/selling October. They are just now starting to look like a time of enter. In the long term we have indicated this seasonal move lower in August should be used to start a longer term buying program...Rich Nelson

As always, if you have questions or comments, please call (800) 551 4626 to discuss or send an e mail to: research@allendale-inc.com

The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2006