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May 27th, 2006

Feed

Bob Myers
Division Manager

tubs more than they will hang on water or salt. By pulling the cattle to these areas, you give other areas of the pasture time to catch up, and you can move the cattle to those areas later. Consumption will run around 1/2 to 3/4 of a pound a day. Cost per head per day will be around $0.22.
Second, we need to target the calf. He will hit the tubs some, but not enough to really impact his performance. He is not grazing to the extent that improving rumen microflora, which is what tubs do, will help him. The best alternative is supplementing with creep feed. During hot, dry weather, milk production will decline significantly. Creep feed will help offset the impact of reduced milk intake and keep the calf growing and developing muscle and frame. Intakes won't be very high, but because young calves are more curious, they actually start on creep easier. If we start getting rain and you don't want to feed creep until
fall, these calves will quickly re-adapt to the feeders later in the year. Cost per head per day will run around $0.20, which is easily offset by higher weaning weights. Keeping that calf on a steady nutritional plane pays dividends in reduced sickness and heavier calves.

For those with replacement heifers or yearling cattle, this is a perfect scenario for Ionolyx tubs. These are tubs with Bovatec, which get greater utilization of forages and increased weight gain in non-lactating animals. We have ran trials in this company on closed herds that resulted in increased gains of .2 pounds per head per day. Cost is about $.10 per head per day.
If you have any questions about any of these programs, please contact your nearest location or myself
at 1-800-233-4551. Now let's all go do a rain dance!!

Scott Hillius
Grain Origination/Marketing

Lately a lot of you have been inquiring about what your options are if you will be unable to deliver enough wheat to fill your contracts due to the drought conditions we are experiencing.  There are two alternatives available for you to choose from.  First, you can buy out your contract.  Since the markets are currently trading higher than most of you forward contracted, you will owe the difference between what you sold for and what the current new crop price is.  For example, if you have a forward contract for 5,000 bushels sold at $3.50 a bushel and today's new crop price is $4.50, you will owe us $1 a bushel or $5,000 to buy out of and clear your delivery obligation of this contract.  You can do this now or wait until you finish harvesting so you'll know exactly how many bushels you are short.  Then, if you are still short, hopefully the markets will be lower and it won't cost you as much.  Of course, you are also taking a chance that the markets will be higher at this later date.  Either way, we like to settle these shortages during the day while the markets are trading if possible.  After the contract has been bought back, we will invoice your account and it will show up on your monthly statement sent out the end of the month and due around the 10th of the following month.  If you choose to wait until after you've harvested your crop, it will be taken out of your settlement.
The other option you have is to roll your contract forward to next year.  We just recently found out that due to drought conditions, the Commodity Futures Trading Commission will allow us to roll these contracts forward.  This is done by calculating the difference between July 2006 futures and July 2007 futures.  We will then add a 5 cent service fee to cover rolling our hedges forward.  This will also help offset the margin requirements we will have

over the next year.  Ag Valley will be buying its July 2006 hedge back that was put in place when we bought your grain and moving it out to July 2007 when you will be delivering your grain.  Lately, this has been costing producers 15 to 25 cents.  This of course is also subject to the market and may become more or less expensive if you wait.  For example, if you choose this option and you again have a forward contract for $3.50 and assuming it does actually cost us 15 cents to roll this forward (including the 5 cent service fee), you will end up with an adjusted forward contract for $3.35 due in July 2007.  If you choose to roll your contract forward, you will not have to come up with any of the money to cover the costs involved.  Instead, we will deduct all the rolling costs from your contract price.  Again, we request that this also be done during the day while the markets are trading if possible.
We would also like to remind all of you with revenue based insurance that this is what you paid for and part of the reason you carry it. Because of it, you were able to forward contract knowing it would be there to protect you under circumstances such as these.
While it is unfortunate that circumstances have left us to consider either of these options, it is our intention to make this as easy and stress free for you that we can.  We only ask that these alternatives be used because you are unable to deliver enough grain due to the drought.  As has always been our policy, we will not allow contracts to be bought back in hopes of only achieving higher prices.  Call us to further explain either of these options if you still have any questions.

Petroleum
Lon Zeller
Division Manager

Agronomy
Darrell Fellows
Division Manager

New Diesel Sulfur Standard
Puts Spotlight on Ruby Fieldmaster


The value of Ruby Fieldmaster™ Premium Diesel in your tractors, combines, and other equipment may become even greater a few months from now.
Here's why: Over 95% of the U.S. Refineries will begin producing Ultra Low Sulfur Diesel for highway use by June 1, due to the 1990 Clean Air Act
. Retail pumps choosing to sell Ultra Low Sulfur Diesel must switch over to this new standard by October 15.
True, the requirement applies to only clear diesel for highway use, not off-road uses such as in tractors and combines. But the practicality of the matter is, clear diesel is a huge part of the market. And refineries, after a costly gearing-up to produce Ultra-Low-Sulfur diesel for that market, will be inclined to produce it for both the highway and off-road markets.
About fall harvest time, the dyed diesel you buy for your farm equipment will most likely be Ultra Low Sulfur Deisel. And, here's where the benefits of Ruby Fieldmaster™with its superior additive package becomes especially important. Sulfur in diesel acts as a lubricant. While its removal reduces harmful pollution into the air, it makes the fuel "drier," which leads to scarring of metal surfaces. The injector pump is our biggest concern.
Of all the additives in Ruby Fieldmaster™, lubricity takes on added importance with the introduction of Ultra Low Sulfur Diesel.
Sulfur reduction under the new standard is dramatic. The Clean Air Act required that sulfur content be reduced from 5,000 parts per million (ppm) to just 500 ppm in October 1993 for on-road vehicles. The Ultra Low Sulfur Diesel standard that goes into effect this year reduces the sulfur content to just 15 ppm! That's why we are especially concerned about making producers aware of the importance of Ruby Fieldmaster™, a premium fuel refined and sold by CHS Inc. under the Cenex® brand.
We don't call this a premium diesel without good reason. We have spent millions of dollars quality testing and additive injection equipment. This ensures that the proper dosage of Ruby Fieldmaster™ additive is blended with CHS diesel fuel at the terminal loading rack to meet the features we consider in a must in a premium diesel fuel. Those features and their functions are:
· High cetane: Promotes quicker, more fuel-efficient starts.
· Aggressive detergents: Maximize power and fuel economy.
· Lubricity components: Protects the injection pump and injectors.
· Water demulsibility: Reduces water retention and emulsion problems.
· Corrosion inhibitors: Extends fuel pump life.
· Stabilizers: Reduce gum and varnish buildup on engine parts.

All of the additives in Ruby Fieldmaster™ are important, but detergency and lubricity are critical in today's diesel fuels. Detergents keep injectors clean allowing for an optimal spray pattern so that you don't end up with unburned fuel during combustion. Otherwise, injectors become fouled. Buildup of deposits leads to poor engine performance.
Because of Ruby Fieldmaster's additives and quality standards, it is offered with a Total Protection Plan™ warranty. The warranty covers injectors for 5 years or 5,000 hours, whichever comes first, and the pump for 9 years or 9,000 hours, on new tractors and combines.
Ruby Fieldmaster™, which has been sold since the mid 1970s, was developed primarily for farmers. But, it is well suited to all diesel applications.

The Importance of Research and Development


Some Trends and Facts:

*There will be 8 billion people on Earth by 2025!
*We will need more food during the next 30 years than we had over the last 10,000 years combined!
*Each year, we lose about 50% of the world's crop to pests (weeds, fungi, insects and rodents)!
*Eliminating plant protection products would require a 5-fold increase in cropped land, which is not available!
*The clearing of the tropical rain forests in South America is inevitable and not reversible.
*Most research and development (R&D) in crop protection products is coming from 3 companies - BASF, Bayer, and Syngenta.
*It costs over $200 million to find and register a new product!
*There have been no new herbicide modes of action identified in the last 20 years.
*It takes 10 years for today's discovery to get to the market.
*We need R&D more than we need generic herbicides!
*The new generation of GMO's need to benefit consumers, rather than growers.
Glyphosate (Roundup) resistance is a challenge, but it is manageable, even though it may be more expensive. (A weed may be resistant against a single treatment, but not against a treatment combination using more than one mode of action.)
In summary, we in agriculture need to support R & D in crop protection products to insure our future weed control tools are available.  We can do that by supporting, today, the companies that are spending millions on research and development.   This is why you will see Ag Valley Coop continue to support crop protection products from the major manufacturers.

© 2006 Ag Valley Co-op