Linn Group Morning Corn Comment

CHICAGO - Aug 15/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn market yesterday once again saw the fund liquidation that
many traders have been looking for lately as the crop has gotten better and
the crop has gotten past any chance of weather damage.  We saw the Sep and
Dec contracts make 4 ½ month lows yesterday.  Funds sold 12,000 more
contracts yesterday, bringing their long position down to only 140,000, far
from the all-time high this spring of 279,000 contracts.  The heavy across
the board fund liquidation kept many traders out of the corn pit, but it
looks like we may have found some bottom pickers and an end to the fund
selling near term and corn recovered 4 cents off the lows.  With the huge
projected crop and the excellent weather conditions, the corn market is not
providing much incentive for the market to rally.  The big question is not
the fund selling, we are seeing fund selling, it is that this fund selling
is new shorts, because open interest is not going down with the heavy fund
selling.

eCBOT market was very quiet overnight until the last minute of the night
session when it looks like there was an error as both Dec and Sep contracts
dropped 5-6 cents in 30 seconds and then came right back.  Speculation is
that a large sell market order or a large sell stop was triggered and ran
the bids in the final seconds of the session with nothing available.  This
does point out one of the risks in trading electronically.  The crop
condition report came out after the close yesterday and was unchanged from
last week, see specific numbers below.  This was a little unexpected as many
traders said they were looking for improvement of 2-3 percent in the corn,
but this is far from a rallying cry for corn as the crop is still in very
good shape, especially in the big corn growing areas.  Technicians point to
an oversold market after the lows that were made yesterday and we could see
a little bounce.  Traders will continue to look at export numbers to see
that demand continues at the pace we have seen the last couple of months.



eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCU6                222^0    0^0                   223^2    216^6
ZCZ6                 238^4    0^2                   240^0    233^4
ZCH7                248^4    -4^6                  254^6    248^4
ZCK7                262^0    -0^4                  264^0    262^0

Early Opening Calls:  mixed, maybe 1 better

Top News
-- USDA reports private sale of 105,000 T corn to Columbia in 06/07
-- Corn spreads: Ocon 1,500 CZ/CU, ADM 1,000 CZ/CU, 500 CU/CZ, Fimat 1,000
CZ/CU, Tenco 1,000 CZ/CU, 800 CU/CZ, Fimat 1,200 CZ7/CH, ADM 500 CZ7/CH,
Caly 500 CZ/CU.
-- The USDA progress report shows Corn rated  57%  good to excellent vs. 57%
last week and 51% last year.  Corn dented 25% vs. 21% last year and 19%
average.
-- Huge volume of trade in Corn Monday with 193,626 contracts trading in the
pit and 102,004 electronic.  Open interest off only 2,503 contracts.
-- Hearing of some Corn harvest that will  start  this week in western
Tennessee, western Kentucky and possibly southern Illinois.
-- Funds continued selling Corn  selling 12,000 contracts Monday , only
another 140,000 contracts to go until they are even Corn!!  Funds also sold
4,800 Wheat, 2,000 Soybeans, 5,000 Oil.  Bought  600 Meal.
-- 6-10 day forecast shows normal to above temps, normal to below precip


Cash Markets
-- CIF Corn steady up 1 .  LH Aug. +64 to +67,  Sept. +69 to +75,LH  Sept.
+70 to +??, Oct. +62 to +68, Nov. +62 to +63, Dec. +63 to +66, Jan. +52 to
+55. NS Corn  Sept. -18  FH Oct. -32  LH Oct. -28  Dec. +2  Evansville  CSX
-7


TREND:

The long liquidation continues to drive price action at the CBOT. Weather
has been the most positive to bean conditions and yet that market is only 5
cents lower than the Thur close prior to the crop report. This is because
the market is already short there. Last week, I talked about the corn bean
chart being into support. Used it as a reason not to press beans---little
did I know that corn would lose 40 cents. Both corn and meal have gained
back to major resistance levels vs. corn. Does that mean beans and meal
should be sold---or has corn gotten too cheap?

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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.