Linn Group Morning Corn Comment

CHICAGO - Oct 19/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn closed lower on Wednesday after we saw some profit
taking after the surge in prices on Tuesday.  Technicians will tell you that
the corn market was over bot and due a correction and farmer selling helped
that correction.  December corn is still above all moving averages and in
over bot conditions.  The sell off was also probably caused by harvest
pressure but the cold, wet weather forecast will temper any sell off.  Funds
were pretty quiet, bot 2,000 contracts, but still buying the market.  We
have seen investment funds in the corn market buying any set back in price
and also buying any rallies, or bottom line, they are buying corn.  A good
sell off in wheat also helped contribute to the lower day in corn as we have
seen corn follow wheat for the most part.  There isn't a shortage in spot
corn, but the demand or expanded demand has overwhelmed supply for right
now.  Demand is coming from exports as well as ethanol and will probably
stay that way until corn prices get up to levels that make Chinese corn
prices competitive, making any break in corn to be less than producers that
still have to buy corn can hope for.

eCBOT market was stronger overnight on pretty good volume of almost 18,000
contracts closing almost 4 cents higher in the Dec.  The market opened lower
overnight and then went higher along with the bean market.  Export sales
this morning were in line with expectations at 820,000.  Estimates were from
800,000 to 1,000,000.  This may be looked at as a little bearish because it
was at the low end of the estimated range and it was +20% below last week
and the 4 week average.  Corn prices will continue to be pushed higher by
continued strong demand and the number of acres that will need to be found
to reach production levels needed to supply expected demand next year.  I
think that many traders would like to see a lower corn market today so they
can buy it.  We are at almost record longs in corn and more are expected if
the corn market drifts lower.  Some traders think we will see the funds
buying the corn market the next 2 days to prop up the weekly close.  Look
for the corn market to open higher and trade lower but eventually it will
make new highs.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 319^2    3^6                   320^6    314^2

ZCH7                328^6    3^4                   330^0    324^0

ZCK7                334^6    3^6                   335^0    329^6

ZCN7                338^6    3^2                   340^0    334^2

Early Opening Calls: higher

Top News

**USDA Corn 06/07 Export Sales Net: 820,200 mt; expected 800k - 1.0 mln

-- Exports:

South Korea bought a total of 265,000 mt. Chinese Corn for Jan/Mar.

Taiwan bought 35,000 mt. US Corn for Nov.

-- Officials at Chinese grain exporter COFCO say they have applied to the
government for more export quotas for Corn.  With the recent run up in Corn
values Chinese Corn has been able to capture Asian business that would have
gone to the US at lower prices.

-- Ag Sec office in Argentina says 06/07 Corn acreage forecast at 3.4 mln
ha, up from prior forecast of 3.3 mln ha.

-- Chinese Soybean, Meal and Oil futures closed higher, Corn lower.-- Corn
spreads: JPM 2,000 CN/CZ7, Tenco 1,000 CH/CZ, 1,000 CN/CZ7, 500 CH/CZ7.

-- Mexico's government rejected requests to begin experimental planting of
biotech corn, according to seed companies.

-- Volume was 203.1, with open interest up 7.9 to 1305

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

-- Outside markets:  metals opened lower, but rallied, energies are higher,
dollar is lower against most currencies

Cash Markets

-- CIF Corn up 1 to 2. Oct. +59 to +61, Nov. +61 to +62, Dec. +64 to +67,
Jan. +58 to +60, Feb. +57 to +60, March +55 to

+60, Apr. +49 to +50.

TREND:

I have entered open orders to cover short corn at 3.05 to 3.02 because I
know I will not want to do it when we get there---it is the right thing to
do for short futures or cash alike. Can write puts against shorts but that
would be a minimum.

Give wheat a little more room --- $4.75 to $5.00 in the Dec should hold the
break but this market does not yet have the demand characteristics to
support prices as they come unwound due to technical signals. If and when we
do develop a demand market here, expect it to come in KC or Mpls wheat
markets



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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