Linn Group Morning Corn Comment

CHICAGO - Oct 4/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market yesterday ran into a technical sell off after
reaching new highs on Monday and technical indicators showing the market as
over bot.  Also adding pressure was the impending harvest that should really
gain momentum the end of this week into the weekend.  We continued to see
the deferreds gain on the front months as many traders expect usage to
explode next year, even more than many analysts are predicting.  The funds
were net sellers of app. 3,000 contracts yesterday.  The eCBOT side by side
system failed yesterday on the opening and finally opened at 11:07 am, but
the pit was not affected.  Once again shows how valuable the pit is when we
experience technological glitches.  Some traders want to say the down move
in the grain markets was a little exaggerated because many traders rushed to
sell the market in the trading pit when their eCBOT order failed.  Weather
forecast for mostly dry weather across the western corn belt will promote
harvest, but scattered rains in the Eastern belt will keep delays in
everybody's mind.  Traders talking about how long the corn market is
currently and the pressure that creates and the weight these longs put on
the market.

eCBOT market was pretty quiet overnight on a 1 cent range, closing ½ higher,
on light volume.  Very little news this morning as we await the export sales
numbers tomorrow before the opening.  Informa will release their crop
estimates tomorrow morning before the opening and there will be some traders
trying to get a jump on those today.  The Linn Group released their Corn
production estimate this morning.  Corn production is estimated at 11.074
billion bushels, with an average yield of 153.61 bushels per acre. This
represents a 1% increase from our September estimate. Our projection
compares to the USDA September estimate of 11.114 billion bushels, and
estimated yield of 154.7.  I don't believe anything has really changed in
the corn market this morning, the traders are still following the wheat, and
watching the weather.  Harvest delays are not a huge deal today, but if we
aren't back up to normal on Monday's USDA report, there will be talk of
increasing prices to keep up with delays.  Wheat is still the leader in the
grain complex and corn will go higher if wheat goes higher.  The sentiment
among many traders today is that the Bear took his shot yesterday and failed
for now.  Many outside markets were significantly lower and the grain
complex was able to survive the sell off.  Look to see a higher opening and
see if the funds come back in and buy the market because we know the users
will be there to support the lower markets.


eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 264^4    0^4                   264^6    263^6
ZCH7                278^0    0^0                   278^0    277^2
ZCK7                286^0    0^4                   286^0    285^4
ZCN7                294^0    0^4                   294^0    293^0



Early Opening Calls: steady, 1 higher

Top News
-- Exports: Taiwan tendering for 60,000 mt. US Corn for Nov/Dec.
-- The USDA announced due to dry weather conditions they will re-survey Corn
and Soybeans acres in South Dakota, Georgia and Alabama for the October
production report.
-- Informa will release Corn and Soybean production estimates Thursday
morning.
-- Moderate Fund trade Tuesday, Sold 3,000 Corn.
-- Linn Group released October production estimates. Corn 11.0 vs. 10.9 in
September Yield 153.6 vs. 151.8   Soybeans
3.27 vs. 3.22 in September   Yield  44.2 vs. 43.6
-- Corn spreads: UBS 1,300 CZ/CZ7, Man 1,000 CZ/CZ7, Tenco 1,500 CZ/CZ7,
1,000 CN/CZ7.
-- Volume was 153.1, with open interest was down 3.3 to 1288.9
-- 6-10 day forecast shows below normal temps, above precip
-- Outside markets:  energies higher, metals mixed, dollar higher against
all currencies.

Cash Markets
-- CIF Corn  steady up 1 .  Oct. +58 to +61, LH Oct. +62 to +64,  Nov. +63
to +66, Dec. +66 to +67, Jan. +53 to +55, March +53 to ??.



TREND:

Not surprised at the break in wheat after the performance over the last
several days. Will be important to see where the market holds. Look for
support in WZ at 4.30 to 4.25. Got the impression the local bear spreaders
were out of the market but the arguments over settlements today show there
are more remaining.

The corn market has also made that good trade on the long term charts---at
least it has opened the markets eyes. Users have been very slow to get
coverage and suspect will be the support that holds the corn market. Fund
length could develop some additional selling here but look for the 2.57 to
2.55 level to provide support on the break.

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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