U.S. CORN, SOYBEAN AND COTTON OUTLOOK AUGUST 20, 2009 Darin Newsom DTN Senior Analyst

To Have a Better Idea of Outlook - Market Structure Two sides to every market Noncommercial side of the market Those not actively involved in underlying cash market Fund traders, Investors, etc. Opinion strongly influences futures trend Commercial side of the market Those traders involved in cash market Reflect underlying fundamentals Indicated by futures spreads

Soybean Market Structure Noncommercial traders are long, but will it last? Dow Jones facing a bearish quarter (October, November, December) U.S. dollar index could find support as safe haven Fundamentals neutral Futures spreads have a weak carry However, it has been strengthening of late Large U.S. production projected Offset by record U.S. and world demand projections U.S. ending stocks pegged at a still tight 210 mb

Soybean Market Outlook With the possibility of noncommercial selling increasing over the latter stages of 2009 and the fundamentals dealing with a possible large production number, soybeans could come under pressure. Look for the November contract to find initial support near $9.60. However, as the 2009-2010 marketing year wears on and world stocks are rebuilt soybeans could push dramatically lower.

Soybean Stocks: Tighter Than Projected?

Corn Market Structure The noncommercial side of the market is growing less bullish as it reduces its net-long futures position. Fundamentals are bearish. The strong carry in the futures spreads reflects the idea production could be larger than the 12.76 bb projected at this time. 12.76 bb is the second largest on record behind 2007-2008

Corn Market Outlook The combination of light demand emerging could support the corn market just above last December’s low of $2.90. However, the type of demand showing up is not the type that will provide long-term support. If the market moves below $2.90 it could quickly move back to the $2.50 to $2.30 area setting up a national average (U.S.) cash price near $2.00.

Corn: Is Demand Driven Market Over?

Cotton Market Structure Noncommercial traders are growing less bullish as they begin to reduce their net-long futures position. Fundamentals are bearish. The strong carry in the futures spreads continues to reflect decreasing world demand. Yes, world supplies also continue to go down but the market seems to still be comfortable with the long-term supply and demand situation.

Cotton Market Outlook The structure of the market (commercial and noncommercial indicators) is turning more bearish. This would imply that the market could begin to move into its seasonal downtrend. The target for the spot futures contract is between 51.00 cts and 47.00 cents.

Cotton: The Trend Seems to be Changing

Conclusion Soybeans – Bullish Corn - Neutral to Bearish Much will depend on direction of U.S. economy in 2010 and strength/weakness of U.S. dollar Market structure will continue to give us good indications of what type of market exists. Soybeans – Bullish Corn - Neutral to Bearish Cotton – Bearish

2009 U.S. Crop Outlook For More Information… Call: 1.402.255.3679 Visit: www.dtnprogressivefarmer.com E-mail: Darin.newsom@dtn.com Thank You !