JUNE 13, 2006 ADMIS AFTERNOON GRAIN COMMENTARY - LOWER REPT-AGR3 GRAINS By STEVE FREED Options By Greg Lytle Trends In Commodities Date: 6/13/06 Contract Close 50-Day MA %Change '05 %Change '06 Soybeans SSAX6 624 1/2 612.87 12.00% 3.74% Soymeal SMN6 181.4 176.08 20.73% -8.06% Soybean Oil BON6 24.97 24.80 6.26% 17.23% Corn CNAN6 243 1/4 249.22 5.37% 12.75% Wheat WHAN6 369 3/4 382.40 10.33% 8.99% Cotton CTZ6 57.54 56.64 21.04% 6.18% Cattle LCQ6 79.070 77.88 7.26% -14.47% Hogs LHN6 73.150 67.01 -14.56% 12.07% US Dollar DXM6 86.44 86.08 12.30% -4.97% Euro EUM6 125.46 126.20 -12.41% 5.61% US Bonds USAAU6 108-10 107.05 1.64% -5.15% Notes TYAAU6 105-310 105.45 -2.23% -3.14% Gold GCQ6 566.8 648.10 18.61% 8.29% Crude CLQ6 69.29 72.56 40.48% 11.94% Copper CPN6 301.05 330.05 37.32% 47.43% Sugar SUV6 15.10 17.06 62.39% 2.37% Coffee CFU6 97.95 108.17 3.23% -8.54% Cocoa CCU6 1491 1524.52 -2.78% -2.17% HEDGE STRATEGIES OBJ 1) SOLD 80 PCT 05 CORN 279.0 CLOSE 243.25 280 (2005 corn crop sales include 45 cent LDP) 2) SOLD 50 PCT 06 WHEAT 370.0 CLOSE 369.75 450 3) SOLD 40 PCT 06 SOYBEAN 624.0 CLOSE 625.0 650 4) SOLD 20 PCT 06 CORN 260.5 CLOSE 268.75 300 5) BUY 240 CU PUT 9 CENTS 6) SOLD 20 PCT 07 WHEAT 415.0 CLOSE 433.75 500 SOYBEANS...Soybean futures ended lower. Soyoil lost ground to soymeal. Traders appeared to be liquidating positions following lower outside markets. Continued weakness in outside markets esp metals and energies offered resistance. Talk of mostly favorable US midwest weather triggered early selling. The maps suggest most of the midwest will see hot/dry conditions over the next 3-4 days. Early next week, 65-70 pct of the midwest could see .20-1.00 inches of rain. Noon extended maps suggest late in the two week period, a weak ridge could develop across the midwest. This week, USDA est US soybean crop at 67 pct good/ex vs 70 last week and 64 LY. Long range forecast hint of warmer/drier midwest weather later in July and August. NOPA May soybean crush is est near 134 mil bu vs near 131 in April. This could suggest a total crush of 138 vs 143 LY. US Oct-May domestic soymeal use is est at 22,275 TST vs 22,483 LY. USDA Oct-Sep goal is 33,400 TST vs 33,563 LY. US Oct-May domestic soyoil use is est at 11,730 mil lbs vs 11,457 LY. USDA Oct-Sep goal is 17,950 mil lbs vs 17,439 LY. US Soybean Export Basis 35N unch BEAN OPTIONS...A less threatening weather picture than Monday and losses in outside markets weighed on beans, though we did hold much of yesterday's gains with Jly down 4 1/4 and Nov 4 1/2 lower. Funds sold about 3,000 on the day. Mann +1000 Jan 700 calls, -1000 Jly 600 calls 12-12 1/2 debit, ABN -500 Aug 600 straddle 41 1/2. The Jly volatility 1.75% lower at 24.5-25%, and Nov .75% easier at 24.25-24.5%. CORN...Corn closed lower and near session lows. Weakness in the outside markets and no sign yet of a long term US midwest dry weather problem helped trigger some fund selling in the corn. 22 pct drop in gold prices since May 8 contract highs has raised concern that large spec long in corn could also begin to liquidate. Will the funds wait and hold longs until more is known about US summer weather and/or increase ethanol demand could reduce US end stocks? Some crop watchers est that current crop ratings suggest a US crop near 11, 050 mil bu or a yield near 153 BPA. USDA est yield near 149 BPA vs 147.9 LY. Crops are rated above trend in IL, WS, IA, MN, ND and TN. NB, IN and TX ratings are below trend. Weekly chart has key trendline support near 234.75. July settled near 243.25. CN closed below key moving ave price levels. Today there was a large fund roll from July. This continues to draw down open interest and offer resistance to futures. Need to trade back over 257 CN to turn market sharply higher. US Corn Export Basis 37N unch CORN OPTIONS...The trade erased most of Monday's gains as wetter forecasts and lower outside markets sparked fund selling of about 3500, which found timid buying interest to close Jly 4 1/4 lower and Dec down 4 3/4. Supportive Fortes +2000 Jly 250 calls 3 3/4, farmers +1000 Jly 260 calls 1 1/2, RJO +1000 Jly 240 calls 8. Pressing Fortis +8000 Jly 240 puts 3 1/4-3 3/4, farmers +1000 Jly 245 puts 5 1/2-6. The Jly volatility .25% better at 34.25-34.5%, Sept and Dec .5% easier at 35.25-35.75% and 32-32.5% respectively. WHEAT...Wheat futures closed lower led by KC. Weakness in the outside markets tended to trigger liquidation in the grains. This included liquidation of long KC and short Chicago spread. Spread traders were also net buyers of soybeans and corn and sellers of wheat. US winter wheat harvest is near 21 pct done vs 11 ave. Kansas is 15 pct done vs 3 ave. As harvest nears C. KS, yields are reported higher than expected. Arkansas harvest is near 75 pct vs 33 ave. Arkansas SRW yields are also being reported above ave and near record high. USDA this week rated the US spring wheat crop 67 pct good/ex vs 69 last week and 81 LY. ND is rated 71 pct good/ex. Some farmers report east ND crop well above ave. SD crop is rated only 25 pct good/ex. WN made new lows for the move. Resistance is building near 378. Trendline support is near 359. KWN support near 467 then 444. Resistance is near 491. There appears a similar chart pattern in crude oil. CL hit stops below 68.40 today. Key support is near 66.60. Resistance is near 72.70. WHEAT Export Basis 0N unch WHEAT OPTIONS...Wheat ended the day down 4 as lower outside markets harvest pressure and losses in neighboring corn and beans weighed on prices and early fund buyers turned sellers. Supportive Mann +1000 Sept 370-410 call spreads, -1000 Sept 360 puts 10 1/2 debit, Tenco -500 Jly 370 puts 8, F.C. Stone -750 Dec 420 puts 38 1/2, -500 Dec 380 puts 17-18. The Jly volatility .75% easier at 35.25-35.5%, and Sept 1% down at 30.25-30.5%. TECHNICAL COMMENTS by Brian Brase BEAN TECHNICALS... July soybeans were lower, continuing the consolidating sideways pattern. The low-range close below the pivot point suggests a bearish bias. But today's weakness found enough support to keep from filling yesterday's gap that now remains at 592.5-594. Filling that gap seems quite likely considering the gap is in the middle of the sideways trend and directionals are not offering any guidance and holding mid-range values to support a move in either direction. There are a host of moving averges in the 592 area that offer support, but they haven't provided much meaningful support or resistance for several months. The triangle/wedge pattern gives an upside breakout objective of around 700 on a move above 612-620 and a downside objective of around 500 on a move below 568-570. CORN TECHNICALS... July corn posted a lower day, gapping down to leave two gaps above the market. Today's lows look like they should find significant support from the six-month uptrend line drawn of this year's lows. The lower Bollinger Band of 241.5 should also offer support. Directionals still look to be trending down to favor the sell side, but Stochastics are oversold and working on a buy signal. The short term trend is down, with several levels of resistance between today's close and the second gap at 252. A buy strategy is in place, with an objective of something over 270 while risking a dime on the trade. WHEAT TECHNICALS... July wheat was lower on Tuesday. A reversal bottom was showing for a while, but the weak finish gives a bearish bias for Wednesday's trade. The low-range close below the pivot point was right at the uptrend line drawnoff of the December and March lows. This is important support further solidified by the lower Bollinger Band at 366.2. The directionals are trending lower to favor the sell side. Stochastics are oversold suggesting caution. The RSI is approaching an oversold value. A buy strategy seemed worth an attempt, based on the Bollinger Band signal and the trendline support. The objective is the 50% retracement to the 400 area, while risking to 365, which would allow filling a gap seen at 366.5-367. The close stop seems necessary on a long position as the near-term trend is down. DAILY TECHNICAL SHEET Moving Averages: 20-day 40-day 50-day 100-day Sup 2 Sup 1 Pivot Res 1 Res CN 252 249 249 244 239 241 244 246 249 CZ 277 273 273 265 265 267 270 271 274 SN 591 595 591 596 589 592 598 601 607 SX 617 618 613 613 618 621 626 630 635 WN 401 386 382 378 363 366 372 375 381 WZ 432 417 412 404 398 401 405 408 413 THE ABOVE COMMENTS DO NOT CONSTITUTE BUY/SELL RECOMMENDATIONS. THE OBSERVATIONS INCLUDE INFORMATION FROM SOURCES BELIEVED TO BE RELIABLE BUT NO INDEPENDENT VERFICATION HAS BEEN MADE AND THEREFORE THEIR ACCURACY OR COMPLETENESS CANNOT BE GUARANTEED.