Linn Group Morning Corn Comment

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

Corn Update:  Corn futures closed higher again on Tuesday as we saw fund
buying come in again on declining stocks, excellent demand for exports, and
the lack of harvest progress this week because of weather.  Volume was very
big and we had good fund buying, app. 7,000 contracts.  Corn hit 2 year
highs early in the session and technicians said we reached key levels as we
see the December contract above all moving averages and the market looks
over bot.  We might be starting to see the corn market find some independent
strength as we have seen it following the wheat over the last couple of
weeks, but there was a reversal in wheat and corn didn't follow.  Weather
forecast will delay harvest and that is starting to get traders talking, but
it isn't a big deal yet.

eCBOT market was lower overnight as we probably saw some of the traders
taking profit from the run up we have seen the last week or so.  The corn
market was in over bot territory and due a technical correction.  Traders
also said they think we will see some heavy farmer selling at these levels
especially since we haven't seen big farmer selling the last week or so into
this rally.  Farmer selling and harvest pressure could drive the market
lower today.  Also, keep an eye on the wheat market as we saw a key reversal
day yesterday and continuation overnight.  Just like when wheat was rallying
and corn followed, if wheat starts to go lower significantly, corn will
follow.  Look for the corn market to open lower today and for buying to come
in and support the market.  The buying will come from not only funds, but
also from producers trying to cover their needs into the spring.  Corn is in
the middle of harvest and we will get pressure on prices, it just probably
won't be as deep or as long as many have expected or like we have seen in
the past.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 315^4    -5^4                  320^4    315^4

ZCH7                325^0    -4^2                  329^2    324^6

ZCK7                330^6    -5^0                  334^4    330^6

ZCN7                334^0    -5^0                  337^2    334^0

Early Opening Calls: 5 to 7c lower

Top News

-- Corn spreads: JPM1,000 CN/CZ7, ABN 1,000 CZ7/CZ.

-- Fund were fairly good buyers of Corn again Tuesday buying 6,700
contracts. Would guess Funds are now long close to 290,000 contracts of
Corn.

-- Chinese Soybean and Corn futures closed lower, Meal and Oil slightly
higher. -- China's state owned Cofco spokesman says the company will invest
as much as $126 mln in an ethanol plant in the Guangxi province.  Annual
production is expected at 400,000 T of feedstock.

-- Volume was 271.4, with open interest up 2.6 to 1296.9

-- 6-10 day forecast shows below temps, normal to above temps

-- Outside markets:  metals slightly higher, energies lower, dollar higher
against most currencies.

Cash Markets

-- CIF Corn off 1. Oct. +57 to +59, Nov. +59 to +62, Dec. +63 to +66, Jan.
+56 to +58,  March +55 to +60.

TREND:

Reversals down in Chi wheat today have all the ear marks of an interim top.
Not sure how far the markets can correct but it should take the spreads
along. If it does, it may give an opportunity to come back to the short side
in July wheat. Use any stops triggered by new highs here as a chance to be
short in the new crop again. Look for 5.00 to be initial support in Dec
wheat, but the size of the longs could take it deeper if a top is confirmed.
Be there to own the market scaled down for 5.00 but could go to 4.70.

The corn market did not weaken today but is also at an important price
level. It should follow wheat down if that break takes place. Initial
support at 3.00 to 3.05. Major support at 2.90 that may not come out until
this market is through with the rally.



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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