Linn Group Morning Corn Comment

CHICAGO - Aug 10/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Traders said that we saw the corn market go higher yesterday
on lighter volume and consolidation trade after the market made 6 week lows
on Tuesday.  The corn market was due a short covering technical bounce and
traders said that many larger customers were squaring positions into the
USDA report tomorrow.  Volume was lighter compared to Tuesday and funds only
bot 3,000 contracts in corn.  Any attempt to rally corn will be met with
selling because of the large crop that is anticipated this year.  Average
estimate by Reuters had corn production pegged at 10.795 bil bu., above the
July forecast of 10.74 bil, but below last years output of 11.112 bil.
Traders continue to talk about the USDA August report as being notoriously
low when final production numbers become available, so that may play into
the market psyche.  As one veteran trader said, whenever the whole market
starts talking about something, the market seems to come back and bite back.

eCBOT market was pretty quiet overnight as we saw the market have only a 1 ½
cent range all night as many traders will square positions and then sit on
the sideline until after the USDA report tomorrow morning.  Traders will be
impressed by the continued strong export numbers as we saw export sales at
1.7 mil this morning, well above the estimate of 900,000 to 1.4 mil.
Traders will point to this number for a higher opening in corn, but rallies
should be met with sell orders because of the good crop that many traders
expect to see when final production numbers are calculated.  Weather
continues to be supportive of corn production and many traders will remind
clients of last year when corn improved dramatically last year when crops
saw supportive weather in August which some veteran traders say is too late
for corn.  Rains will be supportive of crops and that will prevent any of
the grain markets from rallying very much.  Traders look for mostly choppy
trade today as the market prepares for the crop report tomorrow.


eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCU6                239^4    -0^2                  240^4    239^0
ZCZ6                 256^4    -0^2                  257^4    256^0
ZCH7                270^2    -0^2                  271^2    270^2
ZCK7                279^4    -0^4                  280^0    279^4

Early Opening Calls: 1-2 higher off export sales

Top News
-- Deliveries:  Soybeans  1,174  thru 8/9/06  Term stopped  78  Oil  110
thru  8/4/06 no stopper   Meal  69  thru 8/9/06   Bunge stopped  69
-- Funds trade not very big Wednesday. Funds  Bought 3,500 Cor, 1,600 Wheat,
1,500 Oil,  1,600 Soybeans. Sold 200 Meal.
-- Soybean spreads: IA 500 SF/SX, 200 SN/SX7, ABN 400 SQ/SU, UBS 400 SU/SX.
-- Corn spreads: Ocon 5,000 CZ/CU, Fimat 4,000 CZ/CU, Fimat 1,500 CU/CZ,
Caly 1,000 CZ/CU
-- Chinese Soybean, Meal and Corn futures closed lower, Oil higher.
-- 6-10 day forecast shows above temps, normal to below precip
-- Volume was 190.8, with open interest down 17.0 to 1249.0
-- Export sales were 1.162 current marketing year, 555.9 next marketing year

Cash Markets
-- CIF Corn up 2 to 3.  Aug. +60 to +63, LH Aug. +62 to +65,  Sept. +65 to
+72,LH  Sept. +68 to +70, Oct. +60 to +62, Nov. +58 to +63, Dec. +60 to +65,
Jan. +48 to +55. NS Corn       Sept. -18      FH Oct. -32  LH Oct. -28  Dec.
+2      Evansville  CSX  -7

TREND:

The rebound finally came but trade was rather anemic all day. The spread
trade was more active with a lot of the commercial resting orders at 17 in
U/Z corn being taken out early by fund bear spreading. Look for a quiet
trade tomorrow so that we may have to wait for any action into Fri.

Oil continued to gain on meal. Continues our favorite trade. Note the new
crop crush margins below show the crusher not so willing to slow the crush
now. Storage still is a problem for soyoil? Look for domestic off take to
continue to make that less so. Next cry will be where are the meal buyers?
May take that market lower than we thought?

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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