In This Issue

Live from the S&P Trading Pit! Market Squawk Box

Weekly South American Soybean Update

Reports and Expiration Notices

March 1st, 2006 — Issue #316

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Weekly South American Soybean Update

Highlights of a broadcast with our Sao Paulo affiliate

by James Barnett, Man Financial

Good rains have improved crop conditions across most of Brazil over the past week. In particular, overnight rains of up to 1 inch have improved soil moisture levels across NW RGDS, and these rains are currently moving north through western Santa Catarina into Parana today. With 50% of the soybean crop in RGDS in the pod fill stage while around 40% of the crop is still flowering, this week's rains are very timely.

The Brazilian soybean harvest is now 15% complete. Harvest is 32% done in Goias, 26% in Mato Grosso, 11% in MGDS, and 11% in Sao Paulo.

Yields have been quite variable this week in Mato Grosso, with some areas reporting yields of 60-65 bags/hectare, while others report yields as low as 40-42 bags/hectare. However, as a whole, yields have been improving as they move into full-season beans, and yields are expected to continue to improve in the coming weeks. The biggest issue has been the wet crop, which has led to significant discounts for drying costs at the elevators.

Embrapa has reported 1,025 cases of Asian rust across Brazil, an increase off 55 compared to last week. Fungicide spraying remains active, and rains have been limited enough across the wetter areas of Mato Grosso and MGDS for these sprayings to be more effective than they were the previous week.

The cash market remains slow, as the real gained 3.5% in February on the US dollar, limiting farmer sales. Most of the fresh buying has been made by local crushers, with exporters relying largely on already purchased beans.

Our affiliate noted that Brazilian storage capacity now equals around 85% of its total grain and oilseed production, allowing most of the crop to be stored away. Farmer storage capacity remains low but has doubled in the past year to total around 11% of expected production.

The February export line-up totaled around 600,000 tonnes of soybeans. The March line-up at all ports totals around 1.8 million tonnes. So far, there are no significant supply or logistical problems at the ports.

Bird flu has reduced EU meal demand, and this slower export pace has increased Brazilian meal stocks. Poultry export cancellations add to the bearish meal outlook.

Soyoil stocks remain more-than-ample. While a couple of small cargoes of Brazilian soyoil has been sold to France and Germany in recent weeks for conversion into biodiesel, total shipments for this purpose remain statistically insignificant, at around 10,000 tonnes.

Argentine rains have been very welcome and better-than-expected this week, with some local traders now talking about an Argentine crop of at least 40 million tonnes.

Our affiliate currently estimates the Brazilian soybean crop at 56-56.5 million tonnes and Argentina's soybean crop at 39-39.5 million.

There is a risk of financial loss in futures and options trading. Futures trading is neither easy nor an easy way to make money. It takes hard work to have success. Please use sound money management when trading futures. Past performance is not necessarily indicative of future results. Nothing in this newsletter is intended to be a trading recommendation for you to buy or sell futures or options. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed. Readers are solely responsible for how they use the information in this newsletter.

Economic Reports and Expiration Notices

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!