Linn Group Morning Corn Comment

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

Corn Update:  Corn finished very quiet on Friday as we saw the market close
slightly higher as demand kept the market higher but the prospect of a large
crop kept the pressure on the market.  Traders were evening out positions in
anticipation of the Sept. USDA report that will be released tomorrow
morning.  This squaring of positions caused a lot of bull spreading in the
corn market.  I talked about this bull spreading on Friday as we have seen
demand by livestock producers, exporters, and ethanol manufactures increase
thus reduce current stocks.  Some talk around about So. Korea not only
buying US corn, but also importing US beef after banning imports in Dec 2003
thus requiring more corn to feed more beef.  Funds bot 1,000 contracts on
Friday, pretty quiet, but expected in anticipation of the crop report.
Export numbers were inline with the estimates, but some traders considered
the number bearish because it didn't beat the estimates as we have seen corn
exports do the last couple of months.

eCBOT market was fairly active overnight as we saw app. 7,500 contracts
traded and the market set back almost 2 cents.  Some traders like to blame
the down markets late in the session on the outside markets as we are seeing
the metals and energies both down big.  We should see a very choppy,
uneventful day today as the market waits for the release of USDA report
tomorrow morning.  Average guess for Sept USDA production is 152.6 for a
crop of 10.990, which compares to Aug estimate at 10.976.  The Linn Group
released their estimate on Friday afternoon at 151.87 for a crop of 10.948.
The USDA report will take all attention on today's trade and market action
should be very quiet.  Traders are telling me that they are going to be on
the sideline going into the report because crop conditions are very variable
this year and difficult to evaluate. The surprises we saw in crop surveys
was better yields in MN, NE, and SD and some states in the Eastern belt not
as good as anticipated.  Traders also think we could see some reduction in
acres harvested in some subsequent reports.  Look for the market to be lower
on the opening but remain very quiet today in anticipation of the USDA
report.


eCBOT Overnight
Contract            Last                  Net Change       High      Low
ZCU6                230^0                -1^6                  232^2
230^0
ZCZ6                 244^2                -1^6                  247^0
244^0
ZCH7                258^2                -1^6                  261^0
258^2
ZCK7                266^4                -1^6                  269^0
266^4

Early Opening Calls:  1-2 lower

Top News
-- Two cabinet members, Energy Sec. Bodman and Sec. of Agriculture Johanns
told press conferences Friday that Ethanol producers don't need subsidies to
profit.  Sec. Johanns said the federal tax credit for ethanol expires at the
end of 2010 and congress may deal with the subject in a new farm bill.
-- Egypt tendered for 60,000 mt. of Wheat over the weekend and passed saying
prices offered were to high.
-- The Commitment of traders report with Options as of September 5th shows
Funds: Corn   Long  129,234  up  13,938      Soybeans  Short  45,224  off
23 Wheat  Long  1,078  off  13,726  Meal  Short  39,076  off  4,477  Oil
Long  18,086  off  3,954
-- Fund trade fairly quiet Friday.  Funds  bought  1,000 Corn, 1,500
Soybeans, 2,000 Oil.  Sold  800 Wheat.  Even Meal.
-- Deliveries: Corn  2,563  no stopper-- Corn spreads: Tenco 2,500 CZ/CH,
Ocon 2,000 CZ/CH, 1,000 CZ/CN, Fimat 2,000 CH/CZ.
-- Volume was 145.4, with open interest up .752 to 1302.6
-- 6-10 day forecast shows normal to below temps, normal to above precip
-- Outside markets:  Metals much lower, Energies much lower, Dollar lower
against Euro, higher against Yen


Cash Markets
-- CIF Corn  steady off  1.   Sept. +55 to +58, LH  Sept. +56 to +58, Oct.
+59 to +62, Nov. +60 to +65, Dec. +60 to +65, Jan. +50 to +55, March +51 to
??. NS Corn: Sept. -16; FH Oct. -22  LH Oct. -16  Jan/July +3; Evansville
CSX  -6Z


TREND:

Still tracing out a bottom---unusual for this time of year. If we do not get
more excitement to the top side, the weight of harvest will come back to
take over. Crop report next Tues will make a difference in attitudes.

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.