WEEKLY GRAIN UPDATE

For week ending June 27, 2008

By

LYNN SMITH

Senior Futures Broker

ZANER GROUP

800-470-1406

lsmith@zaner.com

SOYBEANS

On Monday, June 23^rd, 2008, July Beans closed at 15.15, down 17 ½ cents, on bearish weather forecasts and a continuation of the strike suspension in Argentina. Traders are looking for improvements in the weekly crop rating as well as good planting progress last week in the Midwest Soybean belt in a report to be released after the close by the USDA. A stronger U.S. dollar also contributed to the negative sentiment. During the session, the USDA reported Soybean export inspections totaled 10.8 million bushels last week vs. 12.7 m.b. the week prior, and16.6 m.b. last year at this time. It was also equal to the four week average. The report was in line with expectations, but with the suspension of the strike in Argentina, most traders expect Bean exports to drop off unless the farmers renew their strike activity. Drier weather forecasts for the Midwest through Wednesday should allow for drying of the flooded areas and good growing conditions for the remainder of the crop. Funds sold an estimated 2,000 contracts during the session. After the close, the USDA reported 91 percent of the Bean crop was now planted vs. 84 percent last week and 95 percent the 10 year average. They also rated the Bean crop at 57 percent in the good/excellent category vs. 56 percent last week and 65 percent the 10 year average. The report was within analyst's expectations. July Beans settled at 15.01, down 14 cents on Tuesday, as the market continued to trade in the consolidative stage that appears to have begun last week. Profit taking and a lessening of tensions in Argentina pushed the market lower and traders took a cautious outlook as the USDA acreage report on June 30^th draws closer. Forecasts for heavy rain across the Midwest brought mixed views from traders as it should benefit some of the drier areas while making flooded and overly wet areas worse. On

Wednesday, July Beans closed 36 ½ cents higher, at 15.37 ½, as wet weather forecasts preventing completion of the Soybean seeding induced traders to add risk premium to pricing. When July beans was unable to challenge Monday's lows, technical buying and short covering pushed the market higher. The farmer/government conflict in Argentina still remains unresolved, with the possibility of a resumption of the farmer strike if talks don't go well. On Thursday, the Census Bureau will release their month crush report with analyst's expecting a U.S. Bean crush of 152.8 million bushels for May, up from the April crush of 149.2 m.b. The USDA also will report weekly export sales prior to the open on Thursday, with analyst's expecting a net cancellation of 300,000 to 150,000 metric tons of old crop Beans, with new crop seen in a range from 2.24 to 2.500 million metric tons. July Beans gapped higher on Thursday and posted a new life of contract closing high at 15.74 ¼, up 36 ¾ cents, on continued wet weather in the Midwest along with spillover strength from Crude Oil and Gold. The recent bout of wet weather has prevented planting of the remaining 9 percent of the crop, and if the wet forecasts continue, farmers may have to abandon a portion of that unplanted amount. A weak U.S. dollar also gave the large speculative funds the "green light" to buy most commodities across the board. Prior to the session, the USDA reported Soybean exports totaled a negative 268,100 metric tons last week as a result of a large China cancellation, vs. 171,200 m.t. the week prior. The Census Bureau reported the May crush at 150.36 million bushels vs. 149.2 m.b. in April. The exports were in line with analysts expectations, however the Crush report was slightly negative. Looking forward to the USDA acreage report scheduled for Monday June 30, most analysts expect a slight reduction in planted acreage down to 74.203 million acres, down 590,000 acres from their March projection of 74.793 m.a. The range of estimates was from 71.965 m.a. to 76.000 m.a. The analyst's average estimate for ending stocks came in at 669 million bushels, with a range of 615 m.b. to 743 m.b. Funds bought 4,000 contracts during the session. On Friday, July Beans closed 7 ¼ cents higher at 15.81 ½, as traders positioned themselves for the USDA acreage report to be released prior to the open on Monday, June 30^th. Weather forecasts for continued wetter than normal precipitation over most of the Midwest was bullish, however pre weekend profit taking limited the advances. Spillover support from Crude Oil and Gold contributed to the bullish psychology, however the market lacked sufficient buying power to challenge the old highs. In last week's report, I recommended buying the Sept. $20.00 call for 15 cents or less, which should have been filled on Tuesday. However, the option did not reach my price target of 30 cents, so I would target that price in next week's trade. The option closed at 17 cents on Friday.

CORN

On Monday, June 23^rd, 2008, July Corn closed up 3 cents at 7.24 ¼, with spillover support from Crude Oil balanced by improving weather conditions throughout most of the Midwest. Dry weather forecast through Wednesday should allow some of the wet areas to dry out, although most of the flooded areas will not recover and it is too late to replant Corn. During the session, the USDA reported Corn export inspections totaled 36.7 million bushels for last week vs. 38.1 m.b. the week prior, and over the 30.8 m.b. one year ago. It was just under the four week average of 37.7 m.b. It was a neutral report, but had little effect on market pricing. After opening lower, July Corn rallied on short covering and closed near the highs of the session. There appears to be a "buy the dips" attitude amongst a number of traders who were unable to get long when Corn shot up the past month. After the close, the USDA reported 59 percent of the Corn crop is in the good/excellent category vs. 57 percent last week and 70 percent the 10 year average. They also indicated 8 percent of the Corn crop in Iowa remains flooded vs. 9 percent last week. This would affect 1.14 million acres planted to Corn in Iowa. The report was in line with analysts expectations and is not expected to have a large impact on pricing. July Corn closed down 11 ¾ cents on Tuesday at 7.12 ½, as a lack of bullish news and some trader concern with possible government intervention to limit fund speculation pushed the market lower. Spillover weakness from Crude Oil and Beans contributed to the bearish sentiment and after a brief rally failed, the market pushed back to close to their lows for the session. On Wednesday, July Corn closed up 17 ½ cents, at 7.30, as wet weather forecasts across the same general area that

WHEAT

On Monday, June 23^rd, 2008, July CBOT Wheat closed at 8.66 ¼, down ¼ cent for the session, in a quiet range bound session with little new fundamental news to move the market. Drier weather in the Plains promoted ideas that good harvest activity would bring the completion percent close to the norm for this time of the year. Analysts expect a range of 27 to 29 percent complete in the USDA crop progress update to be released after the close Monday. During the session, the USDA report Wheat export inspections totaled 17.7 million bushels vs. 14.665 m.b. the week prior, and 16.8 m.b. last year at this time. It was a friendly report, but with the majority of harvest still to come, it generated little buying interest. KCBT July Wheat closed at 9.04, down 11 cents for the day, as good harvest pressure kept this market on the defensive. MGE July Wheat closed at 10.98, up 5 cents for the session as traders spread off the July/Sept. months with September MGE Wheat closing down 6 cents to 9.64. After the close, the USDA reported 22 percent of the winter Wheat crop has been harvested vs. 16 percent last week and 33 percent the 10 year average. They also indicated 46 percent of the winter Wheat crop is in the good/excellent category vs. 47 percent the week prior and 48 percent the 10 year average. They also reported 72 percent of the spring Wheat crop was in the good/excellent category vs. 67 percent the week prior, and 68 percent the 10 year average. July CBOT Wheat closed at 8.70 on Tuesday, up 3 ¾ cents, on short covering and unwinding of long Corn/short Wheat

spreads. Some concern with harvest delays because of excessive moisture in some areas of the Plains wassupportive, as the winter Wheat harvest is about 10 percent behind the average. KCBT July Wheat closed at 9.09 ½, up 5 ½ cents reversing a portion of Monday's losses. MGE July Wheat closed at 10.85, down 13 cents for the session. On Wednesday, July CBOT Wheat gapped higher on the open and closed at 9.01 3/4, up 31 ¾ cents, as short covering by the funds pushed the market through strong resistance at the 9.00 level, hitting a session high of 9.12. As of the most recent CFTC supplemental report, the Funds were net short 26,094 contracts, and the recent harvest delays and bullish chart patterns may have induced short covering even as the harvest accelerates. KCBT July Wheat closed at 9.38 ¼, up 29 ¼ cents for the session, with MGE July Wheat at 11.29 ¼, up 44 ¼ cents on the day. On Thursday the USDA will report Wheat export sales for last week with analysts expecting a range of 300,000 to 550,000 metric tons. On Thursday, July CBOT Wheat closed at 9.24, up 22 ¼ cents, as wet weather has slowed the winter Wheat harvest and has caused some concern regarding Wheat diseases, which are more common with moist conditions. Spillover support from a strong Corn, Bean and Crude Oil market, along with a weaker U.S. dollar pushed the market higher to a two month high at 9.47 ½, before profit taking brought the market off its highs at the close. Prior to the open, the USDA reported Wheat exports totaled 503,400 metric tons vs. 538,100 m.t. the week prior. They also announced a sale of 280,000 m.t. of hard red winter Wheat to unknown destinations for the 2008-09 marketing year. Both reports were bullish as demand continues to be quite brisk, even at the current higher prices. KSBT July Wheat closed at 9.54 ¾, up 16 ½ cents, with MGE July Wheat at 11.90, up 60 ¾ cents for the session, in a thinly traded session. On Friday, July CBOT Wheat closed down 30 ¾ cents, at 9.12, as a combination of pre weekend profit taking and harvest selling pushed the market sharply lower. Harvest of the winter Wheat crop should be approaching 40-50 percent complete with most farmers reporting better than expected yields. Funds sold an estimate 2,000 contracts during the session, KCBT July Wheat closed at 9.45, down 27 ½ cents, on profit taking and position squaring prior to the USDA acreage and stocks report set for Monday. The average of analyst's estimates is 63.818 million acres, up from March's USDA estimate of 63.803 m.a. The average of analyst's estimates for the ending stocks figure came in at 278 million bushels as of June 1^st vs. 456 m.b. last year. MGE July Wheat closed at 10.10, up 7 ¾ cents for the session. In next Monday's acreage report, the average analyst's estimate for spring Wheat planted acreage came in at 14.321 million acres vs. 14.333 m.a. in March. In last week's report I recommended holding the long Sept. 8.00, put bought for 30 cents the prior week and target 50 cents for profit taking while risking to 20 cents. Longs should have been stopped at 20 cents on Wednesday, for a 10 cent loss ($500.) plus trade costs. No new recommendations for next week because of the USDA acreage and stocks report on Monday.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions are subject to change at any time, and are not a solicitation or recommendation to buy or sell commodity futures or commodity options. The information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness.