Linn Group Morning Corn Comment

CHICAGO - Aug 11/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn yesterday was a snooze as traders prepared for the USDA
report to be released this morning before the opening, closing slightly
lower as we saw funds come in and sell beans.  Funds were pretty quiet as
estimates had funds selling only 1,000 contracts.  Volume was very light as
we a lot of spreading being done in the Sep/Dec.  Traders also remained
focused on the August weather forecast which remained bearish.  Exports also
remained very strong leading to some support to the corn market.  The
president of the China Cereal's and Oil's Association said at a grain
conference in Beijing that he didn't expect significant corn imports this
year because there are plenty of corn stocks and harvest looks good.

ECBOT was pretty quiet overnight as traders waited for the USDA crop report.
The report this morning was bearish for corn as the USDA estimated corn
production at 10.976 bil bu. and estimated yield at 152.2, 4.3 bu higher
than last year.   If the yield and production estimate holds up, this would
be the second largest yield and the third largest production.  Traders look
at this number with a little trepidation as the USDA has had a history of
underestimating yields in their August crop report, but as I talked to
veteran traders after looking at the numbers, they feel the USDA is probably
pretty close to the actual yield this year.  Traders feel the gut reaction
to day will be to sell corn on the opening today but this market is a demand
market, it should find buying every step of the way down.  Looking at state
by state, we feel the estimates in the western belt are pretty strong
compared to what analysts that have looked at the crops were estimating.
Eastern belt numbers were very strong and will probably only get stronger.
Traders also look at a higher carryout number as a reason to sell the corn
market today, but we feel that corn will find buying if it goes very much
lower.  As always, the funds could play a major roll because if they decide
to liquidate, look out, the corn market could get real ugly, real fast.

eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCU6                240^0    1^2                   240^0    238^4
ZCZ6                 256^6    1^0                   256^6    255^4
ZCH7                270^6    0^6                   270^6    269^0
ZCK7                279^0    0^2                   279^0    277^6

Early Opening Calls: ex-report 3 to 4c lower

USDA Report:

**US August Corn 06/07 Crop Prod: 10.976 bln bu.; est. 10.8; July Rpt 10.74
**US August Corn Yield: 152.2 bpa; est. 150.0 bpa; July Rpt 149.0 bpa
**US August Corn 06/07 Carryout: 1.232 bln bu. ; est. 1.11; July Rpt 1.077
**World 06/07 Corn Carryout: 92.88 mmt; July Rpt 91.2
**August S Africa 06/07 Corn Output: 9.0 mmt; July Rpt 9.0

Overnight News:

-- Chinese Soybean, Meal and Oil futures closed lower, Corn higher.
-- Deliveries:  Soybeans  544  thru 8/10/06  Term stopped  16   Oil 175 thru
8/8/06  no stopper Meal  50  thru 8/7/06  Bunge stopped  50
-- Corn spreads: Ocon 7,000 CZ/CU, JPM 3,000 CZ/CU, FCS 3,500 CU/CZ, ABN 200
CU/CZ MLP 1,000 CZ/CU, Fimat 1,000 CZ/CU, Man 1,000 CZ/CU.
-- Volume was 169.6, with open interest down 5.5 to 1343.6
-- 6-10 day forecast shows normal to above temps, normal precip
-- Outside markets are higher with gold up $4, crude up 50 cents.  Dollar is
stronger across most currencies.

Cash Markets
-- CIF Corn up 2 to 3.  Aug. +63 to +??, LH Aug. +64 to +65,  Sept. +67 to
+??,LH  Sept. +69 to +??, Oct. +62 to +68, Nov. +60 to +??, Dec. +62 to +65,
Jan. +51 to +55.  NS Corn       Sept. -18      FH Oct. -32  LH Oct. -28
Dec. +2      Evansville  CSX  -7

TREND:

Hope to get bearish corn production est in the report. Could go a long way
toward bottoming this phase of the corn market. If the report is bullish we
can rally. Lot of trade has given up the ownership this week on the break.
Corn open interest is off close to 70 thou contract his week.

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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