Linn Group Morning Corn Comment

CHICAGO - Nov 1/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market sold off again for the second day in a row as
we continued to see more profit taking on the record long futures positions.
Corn has been due at least a temporary sell of after the market reached
almost 10 year highs.  Selling pressure from harvest and also crude oil
contributed to the sell off.  The big sell off in crude oil the last 2 days
contributed to the down move in corn because of the pressure on ethanol.
Remember, much of the wild speculation in corn is based on the profitability
of ethanol and its massive expansion, and if that is threatened by lower
crude oil prices, it will bring corn prices down with it.  Funds sold 5,000
contracts and the volume was over 300,000.  Export sales overnight were
strong, but that couldn't stop the sell off.  Corn was also following the
big break in wheat, but remember corn is a different animal than wheat and
there are some users that have not priced their needs so far this year.  The
bears will continue to talk about lower energy prices hurting ethanol and
record longs will have to sell if the flat price goes lower.

eCBOT market rebounded slightly overnight on light volume with the Dec
closing 2 cents higher. The corn market broke the last 2 days on renewed
profit taking from the record long positions amid lower energy markets.
Traders will look forward to export sales to be released tomorrow morning to
see if they keep up the pace that we have seen this year.  The corn market
will be tested down at these levels to see if we have user will come in and
support the market on this break.  Some traders want to say the bears
rallying cry that ethanol profitability is going away may be a little
premature because of increased productivity allowing more ethanol per bushel
and the sale of DDG for feed adding value even if prices decline slightly.
So. Korea has announced they will cover their corn purchases through April
by the end of the year and would like to buy Chinese corn because of higher
CBOT  prices, but China continues to pull back exports and many analysts
agree they will not be exporting corn this year.  2 leading grain analysts
will be releasing Nov. USDA estimates this afternoon and tomorrow morning.
Expect the corn market to find support today on fund buying and user
pricing.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 323^0    2^2                   324^0    320^4

ZCH7                337^0    2^2                   338^0    334^4

ZCK7                343^2    1^6                   344^2    341^0

ZCN7                349^6    1^0                   351^0    347^4

Early Opening Calls: 1-2 higher

Top News

-- The Brazil government  announced they will raise the Ethanol mix in the
country's gasoline from 20% to 23%. This will up the country's use by 70 to
75 mil. liters.

-- Renewable Fuels assoc. released stats showing Aug. ethanol production
totaled 329,000 bpd, well ahead of the 69,000 bpd seen in Aug 2005.
Meanwhile, Jan-Aug production averaged 305,000 bpd.  Ethanol Stocks total
384.7 mln gal.

-- Traders in South Korea say they will likely cover April thru June Corn
shipments by the end of the year. S Korea says it would like to buy more
corn from China but selling offers from China have decreased sharply since
last week.

-- Funds all on the Sell side Tuesday.  Funds sold 4,500 Corn.

-- Open interest in Corn down 8,519 Tuesday.

-- Corn spreads: JPM 1,500 CZ/CH, ABN 1,000 CZ/CH, Rose 700 CZ/CH, Fimat 500
CZ/CH, Fimat 3,000 CH/CZ, Fortis 1,000 CH/CZ, Caly 1,000 CH/CZ, Tenco 500
CZ/CH.

-- 6-10 day forecast shows normal to above temps and precip

-- Volume was 306.8 with open interest down 8.5 to 1374.9

-- Outside markets:  metals very strong, energies mixed, dollar slightly
stronger against most currencies

Cash Markets

-- CIF Corn  up 1 to 2 .  Nov. +60 to +61, Dec. +63 to +65, LH Dec. +64 to
+68, Jan. +54 to +58, Feb. +54 to +57, March +54 to +58, Apr. +48 to +51.

TREND:

Corn will go down more grudgingly than wheat. Look for support to develop
only 15 to 20 cents off the highs. Carries are starting to widen as the
index fund roll is expected to get more serious. Same is happening in wheat.

The volatility in wheat and corn continues to fly out the window as trade
sees the selling of puts and calls the cure for missing a flat price trade.



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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