Linn Group Morning Corn Comment

CHICAGO - Oct 2/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market closed lower on harvest pressure as farmers
get into full swing as the weather dries out.  Yields remain variable and
accordingly we are beginning to see some analysts lower their crop
estimates.  Early results show above last year, below last year, same as
last year and some traders in Illinios are starting to get worried that we
are not seeing consistent yields across the state.  Traders said we saw some
farm movement on Friday and accompanied a good harvest weekend, we saw some
pressure, but the market held technical support.  The corn stocks report was
right inline and probably gets lost in the news shuffle, such as weather and
world wheat production.  Wheat has been very strong and traded to new highs
on the opening before coming off, but don't kid yourself, wheat is a leader.
Volume was huge again on Friday at almost 270,000 contracts.   Funds were
pretty active selling 5,000 contracts by the end of the day.  The bottom
line is the market will remain strong because of underlying demand for feed,
ethanol and exports, even into the face of the 3rd largest crop in history.
Notice I said 3rd largest crop and not 2nd largest crop like we were talking
about last week.  Will other analysts lower their expectations like FC Stone
did on Friday morning?  Will we see a lower Oct USDA report than Sept?

eCBOT market opened quietly and then went right up to its highs and stayed
there into the close this morning.  We saw good volume overnight with 12,000
contracts.  The corn market is following the wheat market right now as we
continue to see lower levels in the world wheat crop and thus the coarse
grains.  Traders expect the wheat to lead the grain markets and corn will
follow.  We are not going to see wheat 15 higher and corn unchanged.  I
don't care how big of a crop we are going to harvest, corn will go higher.
It will be interesting to see if the funds are back in the grain markets as
we begin a new quarter and if we see new money come into the grain markets.
The CBOT raised margins in corn and corn spreads and that could cause some
market action, but as one trader said this morning, we may have already seen
the big players chased out of the markets last week.  The good weather
forecast should support harvesting this week and lower prices, but rain now
creeping back in the forecast by the weekend?  Traders this morning look for
a higher open, but off the close of the night session.


eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 268^4    6^0                   270^0    263^2
ZCH7                280^6    5^4                   282^2    276^2
ZCK7                287^4    4^6                   290^0    282^2
ZCN7                296^0    5^2                   297^4    290^6

Early Opening Calls: higher 3 to 5c

Top News
-- Exports:  South Korea, Japan and Taiwan around for Corn.
-- Yield reports on Soybeans continue to be good from almost all areas of
the Corn Belt while Corn yield reports continue to vary from same as last
year, above last year and below last year.  Have to be concerned that the
Corn yields are not consistent , especially in Illinois.
-- The Commitment of Traders report with Options as of September 26 shows
Funds: Corn   Long  178,557  up 60,124
-- Fund trade Friday was mixed and  slowed appreciably from Thursday's pace.
Funds Sold  5,000 Corn
-- The USDA Hog report shows All Hogs at 101%, Kept for Breeding 102%. Both
numbers very close to trade estimates. With
these Hog numbers and the recent Cattle on feed report showing a record
number of Cattle on feed the demand from the feed sector will remain strong
into 2007.
-- Corn spreads: IA 1,000 CH/CZ7, RJ 900 CN/CZ, ADM 500 CH/CZ, Tenco 500
CN/CZ7, Fimat 500 CH/CZ.
-- 6-10 day forecast shows above normal temps, normal to above precip
-- Volume was 263.3, with open interest down 4.6 to 1294.5
-- Outside markets:  metals higher, energies lower, NG higher, dollar mixed

Cash Markets
-- CIF Corn  steady off  1.  Sept. +58 to +60,  Oct. +58 to +60, Nov. +61 to
+64, Dec. +63 to +65, Jan. +52 to +55, March +53 to ??.

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.