Linn Group Morning Corn Comment

CHICAGO - Oct 9/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market ended lower on Friday as we saw some profit
taking and the market being held back on an excellent harvest weekend.  We
saw the deferred contracts set back, but surging wheat kept the Dec contract
almost higher on the day.  Wheat is still the leader here in the grain
complex and even though it set back off its highs by the close.  Wheat bear
spread liquidation is what is moving the grains right now and that has
spilled over into the corn bear spreads as we saw some liquidation.  One
trader said that he feels we are starting to see some traders putting on
bull spreads in corn as the underlying wheat rally has given more value to
spot corn prices.  Seasonal harvest will continue to keep a lid on any rally
in corn as we continue to see excellent weather for harvest and that should
continue into the middle of this week before a cold front sweeps down into
the Midwest.  Exports remain strong as we saw Japan on Friday buy US corn.
Funds were net sellers of 1,000 contracts on Friday and Commitment of
Traders showed the funds long 203,000 contracts, starting to get close to
the record we saw this spring.

eCBOT market moved higher overnight as we saw the wheat market sky rocket
higher another 20 cents pulling corn with it.  The Dec corn contract was up
almost 4 cents overnight on decent volume.  Corn is in the middle of the
harvest so it will be hard to rally, but the corn market keeps finding a way
whether it is increased demand or the explosive wheat or bear spread
liquidation.  Traders will look to wheat and funds for direction as we
should see corn 40% harvested in the USDA report released this afternoon
after the close.  The corn market is very difficult to trade to the long
side this time of the year, but traders that have tried to sell the market
have had their mettle tested and must have deep pockets to withstand the
rallies.  Overall, many traders thought the blow off tops we saw in the corn
and wheat last week would keep the market in check, but after last nights
activity, who knows.  We are looking at Ukraine announcing they will limit
exports for the remainder of the year as the reason for the corn and wheat
rally overnight.  Ukrainian wheat is mostly lower quality, feed grain, but
would still create an even bigger demand for US wheat and corn which we saw
disappear last year as many importers went to the Ukraine.  All I can say,
is watch out, demand markets can be explosive and can shed a lot of blood on
the street, just like we have seen the last week or so in the liquidation of
the bear spreads in the wheat.  The corn market should be higher on the
opening, but I don't know if we will get as high as the night session.

USDA Corn and Soybean Production report and S&D's released Thursday before
the opening.

eCBOT Overnight
Contract            Last      Net Change       High      Low
ZCZ6                 274^6    3^6                   274^6    270^0
ZCH7                287^0    3^0                   287^0    282^2
ZCK7                293^0    2^4                   293^0    290^0
ZCN7                299^0    3^0                   299^0    295^0

Early Opening Calls: Corn 2-3 cents higher

Top News
-- Would look for USDA 's progress report this afternoon to show both Corn
and Soybean harvest 40 to 45% complete.
-- AgResource released their  October Corn production estimate at 11.151
bil.bu. vs. USDA's September estimate of 11.114 bil.bu.  AgResource is using
a yield of  155.2 bu. per acre vs. the USDA's 154.7.  They project  2006/07
ending stocks at 1.157 bil.bu. vs. the USDA's 1.220. They estimate 2007/08
Corn ending stocks at a paltry 367 mil.bu.
-- The Commitment of Traders report with Options as of October 3 shows
Funds:  Corn  Long  203,274 up  24,717.
-- Fund activity Friday was moderate funds sold 1,000 Corn.
-- Corn spreads: Ocon 3,500 CH/CN, FCS 1,100 CH/CZ, Tenco 500 CH/CZ, Man 500
CH/CN.
-- 6-10 day shows below normal temps, above normal precip
-- Volume was 206.9, with open interest down 2.9 to 1281.5
-- Outside markets:  metals higher, energies higher, dollar mixed.

Cash Markets
-- CIF Corn steady up 1  . Oct. +56 to +58, LH Oct. +58 to +60,  Nov. +60 to
+63, Dec. +64 to +67, Jan. +54 to +58, March +54 to +58.


TREND:

The closes on corn and wheat were not as bad as the spike highs on Thur
might have implied. Most of the support in the front came on spread
liquidation---think that is officially 20 times I have used that phrase in
this wire???

That spike high should prove hard to take out with the market setting back
sharply. Takes a happening to get it started, but could be as small as a
clear harvest weekend. Watch Sun night closely. Check for updates on the
Linn Group web site and on Futures Line.

Wheat should be less affected but the spike is still there. The WZ/CZ traded
to 2.02 today which is up against the 1995 highs when wheat was $7.00. The
Jly contracts have never stretched the corn/wheat positions too far. If you
want to fade wheat gains, this is the place to do it.

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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