Linn Group Morning Corn Comment

CHICAGO - Oct 5/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Once again, WOW.  The corn market followed the explosive wheat
market to close 10 cents higher on 2 year highs in the front month.  Wheat
was the big trade of the day hitting the limit up level of 30 cents higher
before falling back some on the close.  Corn surged higher on technical
buying and rumors of investment companies taking money out of the energy
markets and buying grains.  This rally in corn is contra-seasonal, but we
have been saying that for 15 cents or more and it doesn't look like it is
ending anytime soon.  As was the norm, traders continue to point to the
demand for corn to explode in coming years and that speculation is pushing
the corn market higher, even in the face of probably the 2nd largest corn
crop in history.  There was some increased farmer activity with the higher
prices, but much more so in the soybeans than corn.  Volume was very big
compared to Tuesday, but surprisingly, option activity was not very big and
implied volatility remained steady.  Weather is still very favorable in the
Western belt and getting better in the Eastern belt as we will probably see
harvest really getting going in the Eastern belt this weekend into the
beginning of next week.

eCBOT overnight market was a little lower with good volume, app. 15,000
contracts.  A lower overnight market was probably some profit taking after
yesterday's big rally.  Informa released their new corn production estimate
this morning, coming in at 11.151 bil bu or 155.2 bu per acre.  This is
above the USDA September estimate of 11.114.  It will be interesting to see
how the corn market reacts to this estimate as we saw the market rally
yesterday.  Export sales this week were once again very strong, 1.158 mil,
vs. estimates of 800,000 to 1.0 mil.  The export sales this week once again
beat the estimates and fuels the corn demand fire.  It will be a very
interesting day today to see if the funds are back in the market buying or
if we see some profit taking after yesterdays rally.  USDA releases their
October production report a week from today and many people will start to
look to forward to that report.  There are a lot of users that are uncovered
that have been waiting for the harvest break.  Does the USDA throw out a
huge yield at the market (157, 160, 165?), does it matter?  What the USDA
finding another 1 million acres of corn after the USDA has NASS review the
Farm Service Agency certified acreage information in early October?  Look
for the market to open unchanged, lower and look for direction from wheat
and funds.

eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 273^0    -1^2                  274^6    271^4
ZCH7                285^2    -2^2                  287^6    284^6
ZCK7                293^4    -2^4                  295^2    293^4
ZCN7                301^2    -1^2                  303^0    300^2

Early Opening Calls:

Top News
**USDA Corn 06/07 Export Sales Net: 1.158 mln mt; estimated range Corn
800,000 - 1.000 mln
**Informa US October Corn Yield Estimate:  155.2 bpa
**Informa US October Corn Production:  11.151 bil bushels
-- Exports:  Taiwan bought 60,000 mt. US Corn for Nov/Dec.
-- The preliminary report shows Corn open interest up 7,644 contracts
Wednesday.
-- Funds bought 5,000 Corn.
-- Corn spreads: Rose 800 CZ7/CZ, RJ 200 CZ/CN, IA 200 CN/CZ, JPM 300 CH/CK.
-- Mexico is resuming imports of U.S. dairy heifers, lifting a ban imposed
in December 2003 when the U.S. found its first case of mad-cow disease,
Agriculture Secretary Mike Johanns said. Under the agreement, exported
cattle must be under 24 months of age, the Agriculture Department said in a
statement. The heifers will be individually identified as part of Mexico's
mad-cow surveillance program
-- OPEC's President suggest 1 mln bpd crude oil production is "in line with
market fundamentals".  These comments came amid market talk that the price
fixing cartel would hold an emergency meeting over market conditions.
-- Volume was 227.0 with open interest up 7.6 to 1296.6
-- 6-10 day forecast was below normal temps, normal to below precip
-- Outside markets:  energies and metals both strongly higher, dollar mixed
against currencies

Cash Markets
-- CIF Corn off  1-2  . Oct. +56 to +59, LH Oct. +60 to +62,  Nov. +63 to
+65, Dec. +65 to +67, Jan. +54 to +58, March +54 to +58.

TREND:

Very dynamic action today---impossible to predict this type of moves other
than to be away of the potential. The long term corn chart is even more
dynamic than the wheat chart but it has resistance closer---and that harvest
that is taking place!!!

Looked at all the markets after the close. The reversals in the bean complex
are important. Will see if the energy market can continue --- if it does,
look for soyoil to firm along with it. Canola in Canada should be ready for
more of a rally in coming weeks and months. Buy weakness.

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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