Linn Group Morning Corn Comment

CHICAGO - Sep 18/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Well, we saw the corn market rally on Friday, coming off their
lows as the market continues to trade in a range and look for direction.
Traders said that harvest delays, slow/non-existent farmer selling, and
stronger cash markets all contributed to the higher markets on Friday.  Some
analysts are starting to look at the yields coming in as being supportive.
As one trader said, "I haven't seen the big yields that everybody was
talking about last week".  Weather is probably a greater concern for
soybeans than corn today, but rains and cold weather will delay harvest and
put some pressure on corn with the harvest slow downs.  Funds were very
aggressive on Friday, buying 4,000 contracts and we saw a lot of corn
spreading.  Nothing to really report on the export front on Friday as we saw
So. Korea in the market again buying optional-origin corn, probably from the
US.  The bounce in wheat also probably helped corn a little bit.  The sell
off in outside markets, namely metals and energies, are also putting some
pressure on the grain markets.

eCBOT market was stronger overnight trading app. 8700 contracts and closing
2 ¾ higher.  Traders this morning are looking at weather and yields as being
the catalyst for our rally overnight.  Colder and wetter weather forecast
will cause a delay in harvesting and possible frost across the northern
plains.  Both factors considered bullish for near term corn.  Some talk this
morning that yields are coming in disappointing in So. Illinois and one
grain analyst was quoted as saying we will need big, uniform yields across
the northern area of Illinois to get anywhere near the 174 bu per acre that
was forecast.  Traders will start to watch actual yields as they come in
because of the talk of spotty fields and the forecast by analysts have
raised their estimates.  Market consensus is the Oct. numbers will be bigger
that Sept, but you do have your contrarians that will point to spotty,
uneven fields to keep average yields lower than anticipated.  Traders this
morning will be very interested in how we close the market today with a
higher opening.  Are we going to see support on a higher opening or is it
going to meet some selling pressure?  A veteran option traders says there is
a big fund short Dec 240 calls, maybe 9,000-12,000 contracts, and it will be
interesting to see how they handle this position if the market goes higher
and finds more buying.

eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 244^4    2^6                   245^0    242^2
ZCH7                257^6    2^2                   258^4    255^4
ZCK7                265^0    1^6                   265^0    260^4
ZCN7                273^2    2^4                   273^4    270^6



Early Opening Calls: 1-3 higher

Top News
-- Exports: Officials from the Iraqi Grain Board will visit the US this week
raising hope for Wheat buys.
-- The Commitment of traders report with Options as of September 12 shows
Funds: Corn, Long  100,464  off  28,770
-- Funds aggressive in Soybeans Friday buying 6,000 contracts. Funds also
bought 4,000 Corn, 1,000 Wheat and 2,700 Meal. Sold 1,500 Oil.
-- A group in Havana IL. have requested the Mason County Zoning Board
re-zone 260 acres to allow the building of a 100 mil. gal Ethanol Plant. A
official from the Illinois Corn Growers association said the increase
request in plant proposals is to be expected given the price of Oil and
Ethanol but also said there is some concern of plants spacing themselves too
close to each other.
-- Corn spreads: Tenco 2,500 CH/CZ, ADM 1,000 CH/CZ, Eagle 2,000 CZ/CN, UBS
500 CN/C
-- Spanish Ag ministry sees corn crop at 3.61 mln T vs. 4.12 mln T year ago.
-- China's National Bureau of Stats suggests the country should target 7-8%
annualized growth until 2020.
-- Ukraine's grain production forecast for 2006 was cut 2.2% to 37.16 mln T,
down from the previous forecast of 38 mln T and 38.02 mln T in 2005.
-- Ukraine grain stocks as of Sept 1 totaled 16.0 mln T compared to 11.5 mln
T on Aug. 1.
-- Volume was 201.2, with open interest down 1.1 to 1309.3
-- 6-10 day forecast shows normal to above temps and precip.  Private
forecasters differ in temps, believing temps are going to be lower.
-- Outside markets:  metals higher overnight, energies mixed, and dollar
stronger against the Yen, steady against Euro.


Cash Markets
-- CIF Corn  steady off 2. Sept. +61 to +62, Oct. +62 to +67, LH Oct. +63,
Nov. +62 to +66, Dec. +63 to +68, Jan. +53 to +55, March +53 to ??. NS Corn
Sept. -9      FH Oct. -15  LH Oct. -10   Nov.  Even   J/F/M  +2
Evansville  CSX  +3Z


TREND:

Finally a reversal after a steep break in all the markets?  Does not
necessarily mean a bottom but is a building block. How will the markets
react?

Corn does not have the fund or spec short to create the covering rally. Does
have the same harvest pressure hanging over the market. Look for a contrite
trading range to develop between 2.40 and 2.50. Could surprise me and break
out to the down side. If it does, do not look for a trade much past the 2.30
to 2.20 level. We should remain a solid 35 to 40 cents over the trading
ranges of last year.

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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