Linn Group Morning Corn Comment

CHICAGO - Sep 1/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market moved higher yesterday on fund buying and
positive export sales AGAIN last week.  As one veteran trader said this
morning, corn went higher because exports are going crazy.  Support for corn
is being built on fund buying and overall market sentiment that the USDA
report in September is going to be bullish as compared to the bearish report
in August.  Volume was strong again with funds buying almost 7,000
contracts.  Traders are keeping an eye on not just the direction of futures,
but also option trade.  Options have become a big part of fund positions
because of the leverage they offer and some of the bigger funds are putting
on huge bets using options.  Today, wheat is leading the corn higher as we
continue to see fund buying from the wheat spillover into the corn market.

eCBOT market overnight was pretty active on 4,800 contracts and a 2 cent
range.  Traders this morning are looking to see if we are going to have the
funds in the pits again this morning ahead of the weekend or if we are going
to see some profit taking today.  Funds have been very active the last 2
days and with the short specs in the market, it should be interesting to see
what the commitment of traders report looks like this afternoon.  Remember,
last week, the report showed the small specs short 130,000 contracts and
they are usually wrong.  I think the market will see a pull back today after
the last couple of up days, but you need to be careful of the funds because
they trade big and can be unpredictable.  Market will come under pressure on
the Sept deliveries and stoppers and the huge crop that is coming out of the
field in a matter of months.



eCBOT Overnight
Contract            Last                  Net Change       High
Low
ZCU6                231^0                -1^0                  232^0
231^0
ZCZ6                 247^6                -0^2                  248^0
246^6
ZCH7                262^2                -0^4                  262^4
261^4
ZCK7                271^0                -1^0                  272^0
271^0


Early Opening Calls: mixed

Top News
**US August Non-Farm Payrolls: +128,000 ; expected 120,000
**US August Unemployment Rate: 4.7%; expected 4.7%
**US Average Hourly Earnings $16.79 increased +$ 0.02
-- Exports:  South Korea bought 55,000 mt. opt. org. Corn for Dec.
-- Deliveries:  Corn  2,613  thru  8/30/06  no stopper.  .
-- Another big weekly sales number for Corn. Old crop sales were actually a
net reduction of 13.7 mil.bu. as the 2005/06 year came to a end.  Sales for
2006/07  crop year were a whopping  79.8 mil.bu.   We are starting the
2006/07 crop year off with some of the largest total sales in many years.
Next weeks Corn sales should be fairly good also as South Korea has bought
almost 400,000 mt. of Corn this week.
-- A analyst at the Jilian Grains Center says that Jilian province which is
the largest Corn producing region in China and the largest exporter will
need to keep all the Corn produced within the province by the year 2010 to
supply Corn processors.
-- Funds on the buy side of Corn and Wheat again Thursday buying 7,500 Corn,
6,700 Wheat, 400 Soybeans.  Sold 900 Meal.     Even  Oil. Commercials bought
2,000 Oil.
-- Ethanol Output Worldwide to climb 16% in 2006 - Int'l Sugar Org. The
group estimated 39 bln liters would be produced, suggesting Brazil & US are
the keys to leading the strong growth.  The sugar organization went further
to suggest rising grain prices will add to the cost of ethanol production in
the US, China & EU.
-- Corn spreads: Rand 1,000 CU/CZ, FCS 500 CU/CZ, Rand 1,000 CU/CZ, Tenco
300 CU/CZ.
-- 6-10 day forecast shows normal to below temps and precip
-- Volume was 218.6 with open interest up 3.3 to 1316.8
-- Outside markets:  after the Unemployment data, metals lower, dollar
stronger, energies mixed.


Cash Markets
-- CIF Corn  steady off 1.   Sept. +68 to +72,LH  Sept. +75 to +77, Oct. +64
to +66, Nov. +63 to +65, Dec. +63 to +66, Jan. +51 to +55, March +52 to ??.
NS Corn  Sept. -3  FH Oct. -26  LH Oct. -20  Jan/July -2  Evansville  CSX
-11Z



TREND:

Wheat was able to confirm the gains yesterday.  Look for trouble against the
4.30 level but if this market keeps going it could point to a major move
starting. Not a market to fade. Liquidate longs if you want but do not be
short. The wheat/corn continued to gain and could be on the verge of
breaking out.

Corn and beans should have a tough time garnering any individual strength
with harvest staring us in the face. CZ should have problems closing the
2.50 gap in CZ. Come away from longs here. Might replace them with a long
wheat call if as concerned as I am---get that past the coop-elevator board?
See no reason to be too concerned about a rally in beans but they could get
tugged along for 20 to 30 cents?

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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