Soybeans ended 17 ¾ cents higher on Wednesday putting an end to the 3 day consolidation. The lows of the session were made on the opening and solid fund buying propelled the market higher throughout the session. Volume was heavy with 112,180 soybeans traded, 51,786 bean oil and 54,489 meal traded. Funds were were buyers buying an estimated 6,000 soybeans, 4,000 meal and 2,000 Oil.

This morning the USDA released their weekly export sales for soybeans. Net sales were 745,600 at the upper range of analyst expectations of 500,000 to 800,000 mt. Bean sales included 5 cargoes to China. Also released this morning was Census crush. The crush came in at 146.20 mil. bu for August above analyst expectations of 145.2 mil bu. Meal stocks were off 80 to 234 short tons and oil yields were off slightly to 11.37 vs 11.38 in July and 11.67 last year. China is still active shopping US beans and Mexico is shopping soybeans. US meal remains well under EU feedgrain values. Overnight Chinese soybeans, meal and oil all closed higher. Malaysian Palm oil futures closed higher.

Early Opening Calls: 12 to 15c higher, soymeal $4 higher; soyoil 20-25c higher

Top News

**US August Census Bureau Soybean Crush: 146.195 mil bu, expected = 145.2 mil bu, last year = 142.0

**US August Census Bureau Soy Oil Stocks: 3.008 bil lb, expected = 3.019 bil lb, last year = 3.060

**US August Census Bureau Soy Meal Stocks: 234.685 short tons, expected = 287.5, last year = 225.8

**USDA Soybeans 07/08 Export Sales Net: 745,600 mt; expected 500,000-800,000

**USDA Soybean Meal 06/07 Export Sales Net: -22,600 mt; 07/08 Export Sales Net: 47,400 mt; expected 70-125,000

**USDA Soybean Oil 06/07 Export Sales Net: 1,500 mt; expected 5-15,000

-- USDA quarterly grain stocks & USDA Annual Small Grains summary will be released on Friday morning. Corn stocks on Sep 1 2006 were 1.967 bln bu, collectively analysts expect this year's figure to be 1.15 bln bu. Year ago Sept '06 Soybean stocks were 449 mln bu, and analyst only expect stocks to be marginally higher at 550 mln bu this year on Sept 1. Finally, quarterly wheat stocks are estimated at 1.83 bln bu vs same time frame year ago at 1.75 bln bu.

-- Southern Illinois the latest region to be afflicted by soybean rust - very little risk to yields anticipated - only late double-cropped beans in danger - acc. to USDA

-- European Union eliminates "set-aside" requirement, which directed farmers to leave 10% of their lands fallow - effect could be seen immediately on fall '07 planting intentions, acc. to gov sources

-- Drawn-out monsoons in India could benefit wheat sowing at the expense of some oilseed production and delayed sugar crushing, acc. to traders

-- Brazilian farmers said to be planting their crops, despite lack of follow-up rains, in order to avoid damage later on from soybean rust, acc. to private analysts

-- Brazilian analysts see sales of ethanol exceeding that of gasoline within the next three years based upon soaring sales of flex fuel vehicles in the country

China gov't planning on lowering rail shipping costs for cereals from its northeastern provinces to help curb rise in food costs, will move to a fixed surcharge from distance based one

-- Quarterly Hogs & Pigs report will be released at 2 pm CDT this Friday.

-- Dalian Soybean futures active May +68 yuan/mt; soymeal futures were higher, soyoil higher also

-- Malaysian Palm weaker 7 rinngit lower on continued profit taking traders say.

-- eCBOT Vol. 77,545; Pit Vol. 27,775; Open Interest Change: +8,351

-- Weather: Above Normal Temps. Normal to Above Precip. Scattered showers and thunderstorms will end in the east today.

-- Outside markets. Energy: petrol complex higher, nat gas lower ; Gold $7.00 higher & Silver: 17c higher; US $ lower

Cash Markets

--CIF Soybeans steady up 2 . Sept. +34 to +40, Oct. +36 to +42, Nov. +48 to +55, Dec. +35 to +48, Jan. +42 to +50, Feb. +30 to ??, Mar. +35 to +37

Nathan T. Smith III

Linn Group

nsmith@linngroup.com

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