CENTRAL CITY, Neb. (Dow Jones)--Cash corn and soybean prices imploded
throughout the U.S. interior this week, as rains reached into previously dry
areas of the Midwest and improved production prospects. Increasing harvest
pressure dampened winter wheat markets, although a surprise export sale lifted
elevator bids for spring wheat.


CORN


Cash corn prices retreated rapidly from 4-month highs scored at mid-month,
with July CBOT futures falling 51 1/2 cents (12.3%), this week.

"Central Illinois and Indiana received very good rains overnight and the
forecast calls for more rain today, before warming up the beginning of the
week," said Jim Riley of the Linn Group. "Is there anything a corn crop likes
better than moisture, followed by warm weather? In some areas, you can probably
watch the corn grow next week."

The freefall in futures - which included a limit-down move on Tuesday -
firmed domestic basis (up an average of 1/4 cent), by slowing cash corn
movement.

"Cash market selling is taking a breather," said an Iowa corn merchandiser.
"The market needs some time to digest current supplies. Widening (futures)
spreads are telling us the old-crop supplies are adequate."

Primary interior grain terminals surveyed by CBOT reported an 11% decline in
daily cash corn receipts this week.

Export basis bids for cash corn drifted 1-2 cents lower at the Louisiana
Gulf.


SOYBEANS


Similar dynamics were also at play in the cash soybean market - which ran to
its highest level since July 2004 early in the week - with spot futures
tumbling 50 1/4 cents (6%), and interior basis firming by 1/4 cent.

"Without a real 'shortage' mentality in the soybean complex, prices are free
to fall off at a moment's notice," said Doane Agricultural Services.

USDA continues to predict that an unprecedented surplus of domestic soybeans
will remain in place at the end of the 2006/07 marketing year, totaling around
600 million bushels.

With export sales rising 62%, CIF soybean basis rose 9 cents on the week.

"USDA reported weekly soybean sales at 359,300 tonnes or 13.2 million
bushels," noted Doane. "These were the largest weekly sales in eight weeks."


WHEAT


Improving harvest conditions tripled weekly receipts of winter wheat at some
major terminal markets this week, helping drive down spot futures by about 2-4%
(25 1/2 cents for KCBT HRW and 14 1/4 cents for CBOT SRW).

"Drier weather in HRW and SRW country should continue for several days,
allowing producers to get in the fields," said analyst Alan Brugler. "The
warmer and drier weather is also friendly to a spring wheat crop that has
excellent yield prospects."

Old-crop July hard red spring wheat still managed to mount a 13 3/4-cent
rally, however, responding to the USDA's announced sale of some 5.9 million
bushels of U.S. HRS to "unknown destinations" this week.

Domestic wheat basis moved in the opposite direction of futures this week,
with winter wheat premiums climbing about 1-3 cents, while HRS values dipped 4
1/4 cents.

Dwindling pipeline supplies of soft red winter wheat sparked an all-out
explosion in barge basis bids for that class of wheat at the U.S. Gulf, pushing
up CIF premiums at some New Orleans area grain terminals by as much as 15
cents. The rapid rise in basis was attributed to a combination of improved
export demand, and indications of disappointing harvest yields.

"We got our first load of wheat in ... but I'm afraid yields are going to be
pretty cruddy," said a western Illinois grain merchandiser. "Wheat anywhere
south of St. Louis got hurt by the (Easter) frost, and it's only yielding in
the 30s (bushels per acre). We usually average at least 70, and in a good year
will get 90-100."

Export demand for SRW wheat also improved dramatically over the past week,
with government inspectors certifying 46% more (2.215 million bushels) for
overseas shipment. CIF bids for hard wheat dropped 2-5 cents at ports in the
Pacific Northwest this week.


CROP WEATHER


Rain developed across much of the corn belt overnight, producing 1.00- to
3.00-inch totals from Nebraska to Indiana. Rains continued Friday afternoon in
Illinois and Iowa.

"This is welcome rain to relieve the stress on corn and soybeans from six
weeks of dry weather," said DTN Meterologix.

Meanwhile, the service promised drier weather for farmers attempting to
harvest hard red winter wheat, with the best cutting conditions due to develop
in the western High Plains of Kansas.