Linn Group Morning Corn Comment

CHICAGO - Sep 14/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market yesterday closed unchanged as we saw the
market try and consolidate after the big sell off on Tuesday.  Early in the
day we saw corn go higher on a little short covering and commercial and
ethanol producer pricing, but saw it sell off later in the day on the sharp
decline in the wheat market.  The abundant supply of corn in this year's
harvest is keeping a lid on any attempt to rally the market and we are quick
to see commercial pricing on lower prices.  These competing pressures are
old news, but keeping corn in tight range.  Volume was pretty light as
compared to Tuesday with app. 50% of the volume coming from the eCBOT.
Every trader continues to talk about the aggressive pricing of corn at lower
levels and the increase in export activity.  The market saw some bearish
plays in the options market as we saw traders buying the Dec $2.20 puts and
selling the Dec. $2.40 calls.  This trade is inline with the market staying
in a tight trading range until at least we get through harvest and see
exactly how much corn is harvested.  Funds bot 1,000 contracts all day.

eCBOT overnight market was pretty strong overnight as we saw the market
close 2 cents higher on light volume.  The traders I talked to this morning
said we saw some short covering overnight and some light buying in
anticipation of export sales to be released this morning.  Export sales were
669,900 below the estimated range of 750,000 to 1,000,000.  Second week in a
row we have seen export sales at or near the bottom end of the estimate.  It
will be interesting to see how the market reacts to these numbers as the
market has become dependent on big export numbers.  As one veteran trader
said this morning, on bullish export sales we have always opened higher but
closed lower, will we see the opposite today.  Bulls will want to talk about
weather delaying harvest as we are starting to see a lot of rain and the
forecast calls for cold and wet weather the next 30 days.  Wheat is still
the leader of the grain complex so many traders will look to that market for
direction as we saw yesterday.  I still like the bull spreads in corn, it
may just take awhile for it to work, but it could be explosive.


eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 239^6    2^0                   240^0    237^4
ZCH7                254^2    2^0                   254^4    252^2
ZCK7                263^0    2^2                   263^0    261^2

Early Opening Calls:

Top News
**USDA Corn 06/07 Export Sales Net: 669,900 mt vs. estimates of 700,000 -
1.0 mln mt
-- Exports: S Korea corn processor buys total 110,000 T corn reportedly from
Cargill.
-- Russian Ag ministry figures show 7% less wheat harvested so far this
year.  Only 64.29 mln T have been harvested thru Sept 12 vs. year ago figure
of 68.89 mln T.  Wheat was down at 37.39 mln T vs. yr ago 42.04 mln T and
corn was lower at 79,600 T from yr ago 156.
-- Chinese central bank says corn prices in China rose 6.1% on year over
year basis in Sept.
-- 6-10 day forecast shows normal to below temps, below precip
-- Volume was 146.4, with open interest down 8.9 to 1313.05
-- Outside markets:  metals higher overnight, energies are mixed, dollar is
lower against most major currencies.

Cash Markets
-- CIF Corn 2 to 4. Sept. +60 to +63, Oct. +62 to +66, LH Oct. +63, Nov. +61
to +66, Dec. +63 to +67, Jan. +53 to +55, March +53 to ??. NS Corn Sept. -15
FH Oct. -20 LH Oct. -12 Jan/July Option Evansville CSX +4Z


TREND:

The corn market is stalling against $2.40 as we slowly drift lower with a
test of the $2.33 ½ contract low and possible new lows just ahead. This
leaves the $2.42 to $2.45 area as s/t resistance. The weekly charts would
suggest limited follow-through on the break as the Sept. expires leaving the
$2.20 to $2.30 range as support. Have to give this market a bit more room to
the downside but not enough to sell at this point. Expect buying in the
$2.25 to $2.30 area on Dec.

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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