1. GRAIN OUTLOOK Risk & Profit 2006 Conference Mike Woolverton Kansas State University mikewool@agecon.ksu.edu

2. U.S. EXPORTS 2005/06 (millions of bushels) Projections 2005/06 2006/07est. Projections 2005/06 2006/07est. Wheat 1,004 900 Wheat 1,004 900 Corn 2,100 2,150 Corn 2,100 2,150 Sorghum 195 185 Sorghum 195 185 Soybeans 905 1,090 Soybeans 905 1,090 Source: World Agricultural Supply and Demand Estimates, USDA Source: World Agricultural Supply and Demand Estimates, USDA

3. WHEAT

4. Winter Wheat Estimates, USDA, 1 Aug. 2006 YieldProduction U.S.41.21.283 bil. Kansas32.0 300.8 mil. (40.0) (380.0 mil.)

5. Current Market Influences - Wheat Deterioration of U.S. Spring Wheat Crop (33% vs. 73%) Deterioration of U.S. Spring Wheat Crop (33% vs. 73%) Australian Drought (-12%) Australian Drought (-12%) U.S. HRW Quality U.S. HRW Quality Low Carryover Low Carryover

6. PRODUCTION PROJECTIONS, U.S., 2006/07 All Wheat – 1.801 bil. Bu. – down 14% All Wheat – 1.801 bil. Bu. – down 14% Hard Winter – 660 mil. Bu. – down 29% Hard Winter – 660 mil. Bu. – down 29% Hard Spring – 423 mil. Bu. – down 9% Hard Spring – 423 mil. Bu. – down 9% Soft Red – 380 mil. Bu. – up 23% Soft Red – 380 mil. Bu. – up 23% White – 284 mil. Bu. – down 5% White – 284 mil. Bu. – down 5% Durum – 55 mil. Bu. - down 46% Durum – 55 mil. Bu. - down 46%

7. Current Market Influences Deterioration of U.S. Spring Wheat Crop (32% vs. 73%) Deterioration of U.S. Spring Wheat Crop (32% vs. 73%) Australian Drought (-12%) Australian Drought (-12%) Drop in World Production Drop in World Production U.S. HRW Quality U.S. HRW Quality

8. 2006 - 2005 HRW Wheat Quality 1 20062005 Test Weight lbs/bu 60.7 60.0 Wheat Protein % 13.9 12.1 Flour Yield 71.0 69.0 Wet Gluten % 33.8 29.5 1 Kansas State University harvest survey of Wheat Sheds in Kansas, Oklahoma, and Texas, Summer 2006, preliminary results.

9. Soft Red Wheat Situation Production up 23%; average protein 10.0%; test weight 60.1 Production up 23%; average protein 10.0%; test weight 60.1 July 26 Aug 11 Toledo Basis - -95 -99 Toledo Basis - -95 -99 Spot - $2.87 $2.74 Kansas City Basis - +31 +28 Kansas City Basis - +31 +28 Spot - $5.13 $4.87 Spot - $5.13 $4.87

10. PRODUCTION PROJECTIONS, MAJOR WHEAT EXPORTERS, 2006/07 (MMT) 2006/072005/06 EU-25 119.35 (-3.2%) 122.59 EU-25 119.35 (-3.2%) 122.59 United States 49.03 (-14%) 57.28 United States 49.03 (-14%) 57.28 Canada 25.5 (-2%) 25.98 Canada 25.5 (-2%) 25.98 Australia 21.5 (-12%) 24.5 Australia 21.5 (-12%) 24.5 Argentina 13.5 (+8%) 12.5 Argentina 13.5 (+8%) 12.5 Total Exporters228.88 (-6%) 242.85 Total Exporters228.88 (-6%) 242.85 Total World Prod.598.00 (-4%) 621.86 Total World Prod.598.00 (-4%) 621.86

16. Wheat Balance Sheet 04-05 05-06 06-07 Plant A. (mil.) 59.7 57.2 57.9 Harvest A. (mil.) 50.0 50.1 47.1 Bu./A. 43.2 42.0 38.3 Production 2,158 2,150 1,801 Production 2,158 2,150 1,801 Imports 71 85 105 Imports 71 85 105 Carryover 546 540 568 Carryover 546 540 568 Total Supply 2,775 2,7302,474 Total Supply 2,775 2,7302,474Utilization: Feed and Residual 201 200 145 Feed and Residual 201 200 145 Food 895 910 915 Food 895 910 915 Seed 79 78 80 Seed 79 78 80 Exports 1,060 1,000 900 Exports 1,060 1,000 900 Total Utilization 2,235 2,1882,040 Carryover 540 (24%) 542 (25%) 434 (21%) U.S. Farm Price $3.40 $3.35-$3.45 $3.90-$4.50

17. CORN

18. Corn Estimates, USDA, 1 Aug. 2006 YieldBushels U.S.152.210.9 bil. Kansas125.0393 mil. (135.0)(465.8 mil.) (135.0)(465.8 mil.)

19. Current Market Influences - Corn Drought in Western and Northern Corn Belt Drought in Western and Northern Corn Belt Latest USDA estimate Latest USDA estimate Demand from ethanol producers Demand from ethanol producers Strong export demand Strong export demand

26. Corn/Ethanol Projections, U.S. 06/0707/08 Corn Acres 79.4 mil.82.0 mil. Corn Production 11.0 bil. 12.3 bil. Corn Exports 2.15 bil. 2.0 bil. Corn for Ethanol 2.15 bil. 3.4 bil. Ethanol Production 6.4 bil. g. 8.6 bil. g. DDG Production 9.5 bil. T. 16.0 bil. T. (Thirty to 40 percent will replace corn in rations. Sixty to 70% will replace soybean meal.) Source: Paul Smolen, AgriNetwork Manangement and Mike Woolverton, KSU.

27. Corn Balance Sheet 04-05 05-06 06-07 Plant A. (mil.) 80.9 81.8 79.4 Harvest A. (mil.) 73.6 75.1 72.1 Bu./A. 160.4 147.9 152.2 Production 11,807 11,112 10,976 Imports 11 11 10 Imports 11 11 10 Beginning Carryover 958 2,114 2,062 Beginning Carryover 958 2,114 2,062 Total Supply 12,77613,23713,047 Total Supply 12,77613,23713,047Utilization: Feed and Residual 6,162 6,100 6,050 Feed and Residual 6,162 6,100 6,050 Food, seed, industrial 2,686 2,975 3,540 Ethanol for fuel 1,323 (11%) 1,600 (14%) 2,150 (20%) Food, seed, industrial 2,686 2,975 3,540 Ethanol for fuel 1,323 (11%) 1,600 (14%) 2,150 (20%) Exports 1,814 2,100 2,150 Exports 1,814 2,100 2,150 Total Utilization 10,662 11,17511,815 Ending Carryover 2,114 (20%) 2,062 (18%) 1,232 (10%) Ending Carryover 2,114 (20%) 2,062 (18%) 1,232 (10%) U.S. Farm Price $2.06 $1.95-$2.05 $2.15-$2.55

28. GRAIN SORGHUM

29. Sorghum Estimates, USDA, 1 Aug. 2006 YieldProduction U.S.55.8393.9 mil. Kansas57.0131.1 mil. (75.0) (195.0 mil.)

30. Sorghum Balance Sheet 04-05 05-06 06-07 Plant A. (mil.) 7.5 6.5 6.3 Harvest A. (mil.) 6.5 5.7 5.3 Bu./A. 69.9 68.7 55.8 Production 454 394 296 Imports 0 0 0 Imports 0 0 0 Beginning Carryover 34 57 51 Beginning Carryover 34 57 51 Total Supply 487 451 347 Total Supply 487 451 347Utilization: Feed and Residual 191 150 85 Feed and Residual 191 150 85 Food, seed, industrial 55 55 55 Food, seed, industrial 55 55 55 Exports 184 195 165 Exports 184 195 165 Total Utilization 430 400 305 Ending Carryover 57 (13%) 51 (13%) 42 (14%) Ending Carryover 57 (13%) 51 (13%) 42 (14%) U.S. Farm Price $1.79 $1.75-$1.80 $1.95-$2.35

31. SOYBEANS

32. Soybean Estimates, USDA, 1 Aug. 2006 YieldProduction U.S.39.62.928 bil. Kansas31.093 mil. (37.0)(105.5 mil.)

33. Current Market Influences - Soybeans Hot, dry conditions during bloom and pod filling Hot, dry conditions during bloom and pod filling August rains August rains Large Carryover Large Carryover Bio-diesel potential Bio-diesel potential

39. Soybean/Bio-diesel Projections, U.S. 06/0707/08 06/0707/08 Soybean Acres 74.9 mil. 73.0 mil. Soybean Production 3 bil. bu. 3.1 bil. bu. Soybean Exports 1.1 bil bu. 900 mil. bu. Soybean Oil for BD 2.35 bil lbs.4.65 bil. lbs. Bio-diesel Production 400 mil. g. 730 mil. g. (330 from SBO) (600 from SBO) Soybean Meal Exports 7.5 mil. T. 11 mil. T. Source: Paul Smolen, AgriNetwork Management and Mike Woolverton, KSU

40. Soybean Balance Sheet 04-05 05-06 06-07 Plant A. (mil.) 75.2 72.1 74.9 Harvest A. (mil.) 74.0 71.4 73.9 Bu./A. 42.2 43.3 39.6 Production 3,124 3,086 3,010 Imports 6 4 4 Imports 6 4 4 Beginning Carryover 112 256 515 Beginning Carryover 112 256 515 Total Supply 3,242 3,3463,446 Total Supply 3,242 3,3463,446Utilization: Crushings 1,696 1,7251,750 Crushings 1,696 1,7251,750 Seed 88 92 91 Seed 88 92 91 Exports 1,103 930 1,090 Residual 99 85 65 Exports 1,103 930 1,090 Residual 99 85 65 Total Utilization 2,986 2,8322,996 Ending Carryover 256 (9%) 515 (19%) 450 (15%) Ending Carryover 256 (9%) 515 (19%) 450 (15%) U.S. Farm Price $5.74 5.70 $5.00-$6.00

41. Former Soviet Union, Production, 2002/03, MMT Country Wheat Corn Soybeans Russia 50,550 1,550.42 Ukraine 20,556 4,180.13 Kazakhstan 12,600 - - Moldova - 1,200 - For Comparison: United States 43,705 256,046 75,010 (Short crop) (Short crop) Source: USDA, Agricultural Statistics, 2005. Source: USDA, Agricultural Statistics, 2005.