Linn Group Morning Corn Comment

CHICAGO - Nov 3/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Wow, what a day in the corn market.  Opening calls were 5-7
higher and the market opens 15 cents higher only to touch limit up early in
the session before selling off but still closing 11 cents higher.  Whew.  A
wild day in the corn pit today as we saw the investment funds come in with
everything they have to buy an estimated 20,000 contracts and we had volume
of 423,800 contracts which I believe is a new daily record.  The CBOT traded
over 1 million grain contracts a new record.  Corn reached 10 year highs as
analysts continued to lower their estimate for corn supplies into an already
tight market for next year and with many users not having sufficiently
covered their needs.  Traders said there was some panic buying going on in
the corn yesterday as many traders expected to see a pull back yesterday
before the night session pointed the market higher on very good volume.  The
repeated news out of China that they are pulling back exports to protect
their feed supplies only added to the pressure the corn market felt as it
went higher.  After touching limit up or 20 cents, hedge selling from the
farmers helped push the market lower along with some profit taking from the
unexpected run up.

eCBOT market continued the sell off we saw on the close yesterday opening a
little lower and continuing to close 3 lower.  After yesterday’s big jump in
corn prices, you would have to expect some profit taking and it seems most
analysts you talk to are bearish this morning.  But, as one veteran analysts
reminded me, it will be hard to take corn a lot lower and he would expect to
see some buying if we get 5-10 lower.  So. Korea has bought 8-9 cargos of
corn from both the US and China out to June.  This has been reported on the
last couple of days, but here is some confirmation.  The trade today will be
looking to see if the lower corn market is supported or if we have a near
term top in the market after the blow up yesterday and the subsequent sell
off.  A weekly close above the $3.35 area in the Dec is still considered
very bullish, but these bull markets will have wild swings.  Fund manager
continue to talk about how bullish they are for 2007 with corn prices having
to get high enough to buy bean acres, but bean prices keep going right up
with corn.  The Linn Group released their crop estimate this morning,
10.876, 153.08 bpa.  Details below, but this is a 2% reduction from their
October estimate.  USDA releases its November production estimate Thursday
morning and many traders will be keeping an eye on that number when trading
or squaring their positions.  Keep your eye on the market today and buy
calls if we get 5-10 lower.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 341^4    -3^2                  344^0    339^6

ZCH7                354^6    -4^4                  357^6    354^0

ZCK7                361^2    -5^6                  364^0    360^6

ZCN7                366^2    -4^2                  369^0    366^0

Early Opening Calls: lower

Top News

-- Exports News: South Korea bought 220,000 mt. US Corn for Jan/Mar.

-- Exports News: South Korea bought 110,000 mt. opt. org Corn for May/June.

-- The Linn Group Nov. Corn Crop Estimates:  Production = 10.876 bil
bushels, Yield = 153.08 bushels per acre

-- Linn Group Yield Estimates, State by State, Kansas:  Corn = 125 bpa

-- Linn Group Yield Estimates, State by State, Iowa:  Corn = 170 bpa

-- Linn Group Yield Estimates, State by State, Nebraska:  Corn = 150 bpa

-- Linn Group Yield Estimates, State by State, Illinois:  Corn = 172 bpa

-- Linn Group Yield Estimates, State by State, Indiana:  Corn = 166 bpa

-- Informa will issue a new estimate for 2007 acreage Friday afternoon.

-- Corn sales on the high side of trade estimates again with 40.4 mil.bu.
sold last week.  This takes year to date sales to 778 mil.bu. vs. 576
mil.bu. sold on this date last year.  Sales to date equal 34 ½ % of the
USDA‘s estimate vs. the five year average for this date of  30 ½%.

-- Another big jump in Corn open interest up 14,764.

-- Corn spreads: JPM 9,000 CZ7/CZ, Tenco 2,000 CZ/CN, ABN 1,000 CN/CZ, IA
1,000 CH/CN

-- Chinese Soybean, Meal and Oil futures closed lower. Corn futures closed
higher with talk at the exchange that China will import Corn in 2007.

-- Volume was 423.8 with open interest up 14.7 to 1398.9

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

-- Outside news:  metals lower, energies higher, dollar much stronger
against all currencies but Canadian dollar

Cash Markets

-- CIF Corn  off  1 to 2.  Nov. +60 to +62, LH Nov. +60 to +63, Dec. +62 to
+63,  Jan. +54 to +56, Feb. +54 to +57, March +54 to +57, Apr. +48 to +51.

TREND:

We got the buy stops triggered by technical signals augmented by two closely
watched crop forecasters with reduced yields on corn---interesting that the
increased yields on beans did not cause that market to break?? None of the
markets closed particularly well. It would be very easy to see the markets
gap away from today’s trade---not a prediction but if it happens we could
have seen a top for a while. This would not be out of character for the
markets to make an early Nov high and have to defend it for the rest of the
month.

Act accordingly.

But be sure that the corn market and probably the wheat market are still far
from seeing its full potential. We are creating a tighter fundamental
outlook for corn that has caused the feed industry to look at culling
animals and cutting production due to feed cost. The price of all US
foodstuffs are headed higher.



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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