CENTRAL CITY, Neb. (Dow Jones)--U.S. cash grain prices continued last week's
bearish trend again Monday, garnering dual pressure from falling futures and
backsliding interior basis. Country movement declined overall, while export
basis was mixed.

  Interior basis premiums entered the session with declines averaging 1/4-1/2
cent per bushel for corn, soybeans and hard red winter. SRW wheat premiums
dropped 1 3/4 cents, although domestic hard red spring wheat basis had firmed
by 1/4 cent from Friday.

  CIF markets proved highly variable, with corn and winter wheat basis rising
by 2 cents, despite declines of 2 cents for HRS wheat and 4 cents for soybeans.

  Although exports of corn, wheat and soybeans each fell 43%-46% this week,
some grain merchants characterized pipeline supplies of some commodities on the
open market as surprisingly thin.

  "A large quantity of corn is being entered in the (USDA commodity) loan
program, even with cash prices almost $2 above loan rate," said an Iowa corn
processor. "No one knows whether folks are just using the loan to generate cash
flow on forward contracted bushels, or are just parking the corn and waiting
for $5 corn."

  As of Jan. 7, USDA showed 902 million bushels of corn under government loan,
representing the vast majority of a 935 million carryover predicted for 2006-07
by the agency.

  Exchange-monitored grain terminals said receipts of nearly all grains -
except for spring wheat - fell Monday, with the sharpest decline evident in
milo and winter wheat, where volume totaled approximately one-half to one-third
of last week's daily average pace.

  Like domestic basis, grain futures generally lost ground Monday, placing cash
contracts down by 6 1/4 cents for SRW wheat, almost 5 cents for corn/spring
wheat, 3-4 cents for soybeans, 2 1/4 cents for HRW wheat and a penny-per-bushel
for oats.

  "Falling crude oil prices are pressuring all commodities and undermining
traders confidence that demand will continue for agricultural-based products
such as corn and soyoil to fuel the growing biofuels industry," said Linn Group
analyst Nathan T. Smith III.

  Crude oil, which fell to a one-year low last week, lost additional ground
again Monday. Additional pressure stemmed from good growing weather in South
America.

   CROP WEATHER


  Exceptionally strong winds (with gust of up to 50 miles an hour) likely
hindered grain truck traffic in parts of Missouri, Iowa, Minnesota, Nebraska
and the Dakotas on Monday.

  Precipitation was largely absent from the U.S. grain belt, aside from some
light snow in the northern Plains and Great Lakes region.

  However, forecasters warn that a slow-moving major winter storm is set to
develop later in the week, one which will bring heavy amounts of precipitation
to many areas.

  "Once the precipitation gets started on Thursday, parts of the Delta and
eastern Corn Belt may see that precipitation last through a part of next
Monday," said Freese-Notis Weather. "Melted precipitation amounts of one to
four inches may be common from the storm for eastern Oklahoma, eastern Texas,
the Delta and the Ohio Valley, and there could be places in the Delta that see
amounts exceed five inches."

  Flooding is likely as a result, since soils in the affected area are already
thoroughly saturated.

  The storm may also pose fresh threats to transportation and electrical
service, potentially snarling grain movement from farm to market.

  "We will likely start to see freezing rain develop in northeastern Kansas,
northern Missouri, southeastern Iowa, northern Illinois, and southern Wisconsin
by the end of this work-week, with the precipitation in those areas going over
to snow over the weekend," said the service. "Freezing rain will likely press
further south into the Ohio River Valley as the weekend progresses, and that is
where we might eventually see some of the heaviest ice accumulations."

  Significant snow is also forecast for areas of the southern/central Plains
still trying to recover from the two big storms of late December.

  The storm will be followed by some of the coldest temperatures of the entire
winter season, with Arctic air dominating the eastern 50-65% of the U.S.