Linn Group Morning Corn Comment

CHICAGO - Sep 7/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market found selling pressure yesterday on the
private crop estimate from Informa showing their production estimate bigger
than the USDA estimate released in August.  Informa is highly regarded and
followed in the industry and the market reacts to their estimates.  Volume
was pretty heavy, with funds selling almost 5,000 contracts by the end of
the day.  Traders will be looking to see if corn finds support down at these
levels, with some worried that if we don't find support, we could see some
follow through to test the lows.  We have been here at this time of year and
don't underestimate the power of corn weakness.  Harvest pressure may be too
great for the longs to take and we may see some further liquidation,
remember, funds are long app. 130,000 contracts.  In the long term, the
demand for corn should push the price of corn higher, but we will have times
throughout the year when it will feel pressure.  This time of the year is
notorious because of the impending harvest.  Rains across the Midwest later
this weekend will delay early harvesting if it appears as predicted.


eCBOT market seemed very quiet overnight as we saw a trading range of only ¾
of a cent, but we saw volume of over 11,000 contracts, probably a lot of
spreading.  Weekly export sales delayed a day because of the holiday and
will be released tomorrow morning.  Traders will start to look at massaging
positions into the crop report to be released next Tuesday.  Market should
open lower this morning and the sentiment seems to be to sell any strength
in the corn market.  Active commercial bull spreading yesterday may have a
basis in expected demand in reaction to lower prices.  As we have been
saying corn is in a demand market and we need to continue to have excellent
yields to keep prices from rising dramatically.  We are hearing about some
really good early yields and some not so good early yields.  This just shows
the market how variable yields are going to be this year.  So. Korea was
into buy 2 more cargoes of US corn overnight and we continue to see Asian,
No. Africa, and Latin shoppers for US corn.  Exports remain very strong and
we should see that reflected in weekly sales tomorrow morning.

eCBOT Overnight
Contract            Last                  Net Change       High      Low
ZCU6                226^0                -0^2                  226^2
226^0
ZCZ6                 240^2                -0^4                  241^0
240^2
ZCH7                255^0                -0^4                  255^4
254^6
ZCK7                265^0                0^2                   265^0
265^0

Early Opening Calls: steady/lower

Top News
-- Exports: South Korea bought 110,000 mt. US Corn for Dec.
-- At a Senate Environment Committee hearing USDA's chief economist said the
surging Ethanol industry could incite record Corn prices in the next five or
six years to bring more land into production. He also noted Corn acreage
will have to expand by 5.5 mil. acres by 2010 to around 90 mil. acres to
supply enough Corn for domestic use and exports.
-- Chinese Corn ended higher reports suggest futures were supported by news
of a early frost in Heilongjiang province.
-- EPA final proposal on renewable fuel standards and renewable fuels
production credit trading scheme to be issued today.  Final rule is likely
to be issued in early 2007.
-- Funds all on the sell side Wednesday selling  4,500 Corn, 3,000 Soybeans,
1,000 Wheat, 1,500 Mea, 3,500 Oil.
-- Corn spreads: Fimat 5,000 CZ/CH, ADM 3,000 CU/CZ, 2,500 CZ/CH, UBS 1,000
CH/CZ
-- Deliveries: Corn  2,684  Term stopped 19, ADM 672
-- 6-10 day forecast shows normal precip, normal temps
-- Volume was 206.9, with open interest was down 4.7 to 1306.6
-- Outside markets:  Dollar very strong against all currencies except Euro,
metals much lower, energies a little higher

Cash Markets
-- CIF Corn  up 1 to2 .   Sept. +56 to +58, LH  Sept. +58 to +60, Oct. +62
to +64, Nov. +61 to +66, Dec. +62 to +66, Jan. +50 to +55, March +51 to ??.
NS Corn       Sept. -3      FH Oct. -26  LH Oct. -20  Jan/July -2
Evansville  CSX  -8Z


TREND:

More weakness here today than anticipated. Seemed to be very popular to sell
volatility in options as well. The weakness stems from pending harvest and
proliferation of yields reports. Some are legitimate records but they are
partially offset by some much lower outturns. They can be found just about
everywhere. There was a reason for the Informa disclaimer?

Tried to come back to the long side of corn on the beak today. Do not think
it will hurt much but the outside day down yesterday and the confirmation
today look bad. Must come back and take this trade away quickly or we will
develop some momentum.

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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