Linn Group Morning Corn Comment

CHICAGO - Aug 7/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn market closed around unchanged on Friday as we saw the
corn open higher, sell off and then come back.  Light volume day with only
114,000 contracts trading.  eCBOT system failed on the opening of the grains
and didn't open back up until 12 noon but doubtful that contributed to lower
volume.  After Informa released their production estimate, it was tough for
the market to rally and the market seems to find selling every time the
market rallies.  Weather forecast called for hotter and dryer weather toward
the end of this week and some traders contributed this to the rally to
close, but as every veteran trader continues to point out, weather has
little bearing on most of the corn crop as the corn crop is usually "made"
by this time of the summer.

eCBOT overnight market was pretty quiet overnight as weather forecast turned
to a little milder temps and a little better rain coverage.  This news
caused beans to be 9-10 lower and corn followed beans.  No real news in the
corn this morning as traders will now start to concentrate on the crop
condition report to be released after the close today and on the USDA crop
report that will be released on Friday morning before the opening.  Export
activity remains strong as I mentioned on Friday, China was in buying US
corn for the 1st time since April and traders look at this development as
just the beginning for China buying US corn.  Beans will be the leader today
as weather in August rules the grain markets and corn will probably follow
it lower.  Expect to see fund buying and commercial pricing as corn starts
to go lower.  Traders still looking at corn as a bull market long term, so
any down move will be muted in the deferred months allowing the bear spreads
to continue to work well.


Overnight News:

-- BP shutting down pipeline in Alaska, 400,000 barrels a day, 8% of US
production.  Pushes crude futures $1.50 higher this morning
-- 6-10 day forecast shows normal to above temps, normal precip
-- CIF corn was unchanged, up 1 with Aug +52 to +54
-- Volume was 114,354(18.6 elec), with open interest down 5.99 to 1384.0
-- Gold up a $3, dollar up, euro unchanged, Yen down 50 pts.


TREND:

The corn market traded both sides today, closing unchanged in the Sept and ¼
higher in the Dec. Did not think earlier this morning trade would be as
strong as the night session, it was early, but leaked throughout the day.
Expect trade to continue to be sideways to slightly higher into the crop
report

If you have any questions or want 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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