Linn Group Morning Corn Comment

CHICAGO - Sep 6/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  We sound like a broken record, but corn settled back on
Tuesday as the market realizes that we will probably see the 3rd largest
crop ever this year.  Early in the session it seemed as though corn was
going to follow wheat higher and found some light fund buying, but the
psychological high of $2.50 in Dec. got in the way and produced some selling
with the funds selling app. 1,800 contracts by the end of the day.  Weather
isn't an issue this time of the year for corn, but dryer weather will help
the crop mature and be harvested earlier than usual.  The large harvest is
weighing on prices, but the market will find support on excellent export and
domestic demand.  The market yesterday also found corn/wheat spreading
helping support corn prices.  Traders continue to look at analysts crop
production estimates to help support the market like we saw on Friday from
FC Stone.

eCBOT market seemed fairly active overnight as we saw almost a 5 cent range
to finish ¾ higher on decent, but not great volume, 8,900 contracts.  Trying
to explain the volume last night, we saw the market open unchanged, then
sell off to it lows then rally to its highs all in the first 2 hours of the
session.  The market then drifted lower off the highs the rest of the night
session.  Crop condition report was probably the cause for the initial sell
off as the market was looking for it to be unchanged and good/excellent came
in 2% better.  This was a surprise to the market.  Informa released their
production estimate this morning at 11.068 bil bu, above the USDA Aug
estimate, which puts corn production at a app. 153.5 yield, says traders
familiar with the report.  This was released to their customers yesterday
and may have contributed to the sell off.  These numbers will be considered
bearish, but corn should find support at lower levels with the Informa
report hinting that the actual yield number may be lower than the 153.5 and
nobody will trade the number.  Corn should find some selling today,
especially if we get a higher opening and get anywhere close to the
2.49-2.50 area vs. Dec.  The real surprise may be the support that corn
finds if we sell off even a little bit today.  I just think nobody wants to
really be short corn.  Traders may try and sell corn on rallies, but nobody
really wants to be short corn and along with export and domestic this should
support the market.



 eCBOT Overnight
Contract            Last                  Net Change       High
Low
ZCU6                231^6                3^0                   231^6
227^6
ZCZ6                 245^0                0^6                   247^0
242^4
ZCH7                260^0                1^0                   261^4
257^4
ZCK7                270^0                1^4                   271^2
268^0

Early Opening Calls:  firmly mixed.

Top News
-- Informa estimated US Corn Production estimated at 11.068 bln bu; corn
yields at 153.5 bpa -  according to sources familiar with report
-- AgResource issued a Corn production estimate of 10.876 bil.bu. down 110
mil.bu. from their July estimate. In their S&D estimates they forecast  a
2006/07  ending stocks of   1,012 bil.bu. vs. the USDA's estimate of 1,232
bil.bu.
-- Deliveries: Corn  2,712  thru 9/5/06  no stopper
-- Crop scout Cordonnier lowered his Corn yield estimate this week 1bu. per
acre to 151 bu per acre. His Corn production estimate is 10.81 bil.bu.
-- Funds on Tuesday  bought  5,000 Soybeans, 2,000 Wheat, 4,500 Meal, Sold
3,000 Oil, 1,800 Corn.
-- Corn spreads: ADM 400 CU/CZ, 500 CZ/CZ7, Rose 500 CZ/CZ7, 400 CZ/CN.
-- 6-10 day forecast shows normal temps, normal precip
-- Volume was 206.5, with open interest down 3.2 to 1310.7
-- Outside markets:  energies lower, dollar higher against all currencies,
metals lower, stocks lower

Cash Markets
-- CIF Corn  up 1 to2 .   Sept. +53 to +58, LH  Sept. +55 to +60, Oct. +61
to +64, Nov. +60 to +65, Dec. +63 to +66, Jan. +51 to +55, March +51 to ??.
NS Corn       Sept. -3      FH Oct. -26  LH Oct. -20  Jan/July -2
Evansville  CSX  -11Z


TREND:

Corn got up against the 2.50 gap area in CZ and ran into a lot of selling.
Understandable but something tells me the corn market has made a seasonal
low and that means these gaps may come out after a day or two of back and
fill. Stay tuned but come back to the long side of corn on a test of 2.40.

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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