Linn Group Morning Corn Comment

CHICAGO - Jul 28/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn market yesterday was pretty quiet with volume lower than
usual.  Traders continued to talk about the heat coming into most of the
Midwest this weekend and a short covering bounce.  High temperatures in the
Midwest will reach into the mid-90's this weekend with many traders feeling
the rain and heat will be a little detrimental to the corn and a little
positive to the beans.   Corn is trading below all key moving averages and
most traders say that we will see a technical bounce, just take a look at
the ugly monthly chart.  Commodity funds were pretty light buying 3,000
contracts.  Export sales were very strong, above the estimate, helping to
support the market as well.  Traders starting to talk about corn acres this
year and the next couple of years.  To keep up with demand, corn is going to
have to find acres and those acres will have to come from beans and/or
wheat.

ECBOT market was pretty quiet overnight, closing 1 higher, on a 1 ¾ cent
range.  Traders this morning are still looking at the weather as being
slightly supportive of the corn market even though we are past the
pollination stage.  Hot weather for corn today will limit or potentially
hurt the ear-filling stage of corn development.  Today could be an
interesting day as we continue to watch the funds and their activity,
especially with today being a Friday and the end of the month being Monday.
Some traders are saying to watch out on the close the next two days because
that has when the funds have been most active in the past.  The lower flat
prices continue to increase the demand for corn and wheat as shown in the
export numbers and in domestic demand.

ECBOT Corn
Dec - 255 ½    range - 255 ¾ to 254 ½
Sep - 239   range - 239 to 238
Mar - 269   range - 269 ¾ to 268

Opening Call - steady, maybe 1 higher

Overnight news:
-- CIF corn was steady
-- Volume was 112.4, with open interest up 2.9 to 1397.5
-- Outside markets lower with crude down 50 cents and gold down $6.

Check out www.cropscout.com   to see how far the
crop tour has progressed.

Monday is First Notice Day in the grains, make sure you are out of all long
August positions or risk being delivered upon on Monday morning.

TREND:
Did the bleeding stop today in corn and wheat? Not sure but one thing is for
sure---the lower flat price of corn and wheat has turned on export and
domestic demand again. There continues active commercial pricing in all
markets.  Beans and products suffering from position day and trade getting
positions moved for deliveries on Fri night.

The carries in corn for Z/N are 32 cents or about 4.5 cents a month. May
widen a little more.  Remain convinced that at some time this coming summer
corn stocks will tighten to make N/Z 07 firm. Note the carries in Z/N Chi
wheat are the same as in corn---should be wider by 3 to 5 cents.

Find a way to bear spread deferred Chi wheat and corn could be a long
against that trade. KC bull spreads are still a good synthetic long for that
market. Any rally has to be cash led and the round of business around the
world is finding stronger cash---may tend to support US soft wheat because
it is cheaper and may find a few unanticipated buyers---but the real driving
force for any rally will come from the quality wheat markets.

It really comes down to the fact that the demand for corn and oil remains a
reality if more for the deferred time frame. We have stocks --- burdensome
stocks that will continue to weigh on this market into the fall time frame.
Weather threat in the west still being offset by better conditions in the
east but as the threatened area spreads, eastern yields cannot increase
enough to offset the larger problem area in the west---corn not a place to
be bearish here.

Weather time frame of Aug is more important to beans. However beans are a
better hot weather crop? Stay tuned.

If you have any questions or would like to discuss specific trade
recommendations, contact me directly.

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com
www.linngroup.com/

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