Soybeans gapped lower on Monday and closed lower continuing the long liquidation. September Soybeans ended down 53 ½ cents and the November contract ended down 45 cents. Talk of widespread fund liquidation continued Monday on a extremely high volume sell – off. Grain markets in general have been in a sell – off phase with the soy complex lagging the price decline but Monday the soy complex caught up. Since the week ending 7/4/2008 November soybeans have gone from a high that week of 1642 to yesterdays close of 1403 a decline of $2.39 in 2 ½ . Soybeans traded 199,878, Meal 86,752 and Oil 102,713. Funds were net sellers of an estimated 6,000 Soybeans, 3,000 Oil and 3,000 Meal.

Early opening calls higher. Widespread rumors of Chinese purchases of about 400,000 mt. to 1 mmt. of soyoil recently for their reserves. Expectations are that the purchases would soon be followed by sales from the reserves to further push down edible oil prices. Yesterday after the close the USDA released weekly crop conditions. Soybean conditions were rated up 2% to 61% good to excellent, matching last years ratings. The crop is flowering on only 45% of the crop compared to 70% last year and a 5 year average of 65%. Argentina’s Ag Secretary has resigned in the wake of the Presidents failed attempt to increase export taxes there. Overnight Chinese Soybean, Meal and oil prices closed lower. Malaysian Palm oil futures closed lower.

Top News -- German vegoil analyst group sees world 08/09 Soybean crop harvest at 241.26 mln mt up 18.5 mln mt from the year ago crop. They also estimate the US crop

at 81.4 mln mt up from last year's 72.4 mln mt -- China's Jan-Jun soybean imports rose 24.4% to 17.23 mln mt from the same period last year. Imports during June were 3.578 mln mt up 42% from June 2007,

acc. to customs data -- China's Jan-Jun soymeal imports were 77.413 mln mt while imports during June were 1.05 mln mt, acc. to customs data -- Indonesia cuts palm oil export tax & base rate: beginning Aug 1 the tax has been cut to 15% from current 20%, while base export price lowered to $1,106/mt

from a $1,144/mt, roughly a 3% drop in price. -- India vegoil company exec. says less rain than expected in key oilseed growing regions may cut up to 1 mln mt of vegoil production & could push up imports

in the 1st half of next marketing year. -- Chief US WTO negotiator says US has will to cut farm subsidies to $15 Bln, but says that offer must be met by others opening their markets & need

assurances no legal action will be taken later to further cut subsidies -- Argentina's Ag Sec. likely to step down acc. to reports from local newspapers. -- After adding nearly 1 mln mt of imported Soybeans & 400k mt of imported Soyoil to state reserves, traders say that the Chinese gov't would likely sell

those reserves to help bring down domestic prices to help keep inflation in check, acc. to reuters article. -- Monday's USDA Soybean Export Inspections: 3.562 mln bu; expected 9.0 mln bu. -- USDA weekly soybean conditions table on Monday showed little shift: vp-poor category 11% vs prior week's 11%, fair category 28% vs 30% last week &

combined good-exc categories were 61% vs 59% last week. -- USDA soybean progress report showed blooming at 45% in latest week, year ago it was 70% & the long term average is 65%. -- Dalian soybean futures ended 35 yuan lower to 4,652 yuan/mt, other contracts in the complex were lower; Jan Soymeal finished up 10 to 3,792 yuan/mt; while Jan Soyoil fell 94 yuan to 10,674 yuan/mt -- Indonesia confirms palm oil export tax cut, Malaysian palm oil futures drop 8 ringgit to 3,252 ringgit/mt -- eCBOT Soybean Vol. 163,762 ; Pit Vol. 24,996 ; Open Interest Change: - 6,091 -- Weather: 6-10 Day Forecast: Below Temps East, Normal to Above West. Below Precip East, Above West. The Corn Belt will see chances of widely scattered showers and thunderstorms today into Saturday. Rainfall amounts look to be a trace to 1.00 Temps near normal. -- Outside markets: Energy complex + 0.01 at $131.05; Gold & Silver: +9.0 at $973.1 and +0.236 at $18.664 ; US $ trading down vs. Euro and Yen.

Cash Markets

-- CIF Soybeans steady up 3 . July +58 to +65 Aug. +35 to +45, Sept. +20 to +30, Oct. +20 to +23, Nov. +25 to +30 Dec. +15 to +25, Jan. +25 to +35

Nate Smith Linn Group nsmith@linngroup.com toll free: (877) 787-6278 local: (312) 896-2090 fax: (312) 896-2052