Linn Group Morning Corn Comment

CHICAGO - Nov 7/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market on Monday showed no clear direction on choppy
trade as traders await the release of the USDA report on Thursday with front
month Dec closing 1 ½ higher.  The volume was still pretty strong, but as I
mentioned yesterday, a lot of that trade is spreading as funds are rolling
their Dec positions and the Goldman Roll starting today.  The corn market
may be attempting to consolidate at these higher prices as the prospect of
lower supplies into the future encouraging buying at any attempt to break
the market.  The big harvest we are currently seeing usually causes the
market to sell off, but the lack of farmer selling is helping to stop any
sell off.  Fund volume was pretty light with the funds even to buying 500
contracts.  Export sales were light over the weekend but export inspections
were higher than estimates.  The Chinese group China National Grain and Oils
Information Centre raised their estimate for the country’s corn output from
141.0 to 142.0 million tones in 2006 which is above the USDA estimate of
141.0.  Some talk of expanded corn acres in So America to make up for the
short fall in feed grains out of the Black Sea.

eCBOT market was pretty quiet overnight as we saw Dec close ½ lower on only
a 2 cent range.  Traders say the market should be quiet the next couple of
days as everybody awaits the release of the USDA report on Thursday morning.
Weekly condition reports showed the corn market back up the average at 81%
with OH, IN, and MI lagging behind because of rain, but with a clear
forecast into the weekend, they should catch up this week.  Outside markets
could provide some support as we see a weaker dollar and strong gold this
morning, but most traders will be on the sidelines until Thursday morning.
The corn market should consolidate over the next 2 days as the market waits
for the release of the USDA report, but fund activity will really dictate
the direction of the market.  Not too much to talk about this morning and it
should be more of the same as we saw yesterday with the corn market being
supported on any sell off, fund rolling of positions out of Dec, and the
market waiting for the USDA report.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 343^0    -0^4                  345^0    342^6

ZCH7                357^4    -1^0                  359^4    357^2

ZCK7                365^4    -0^2                  367^4    365^4

ZCN7                371^0    -0^4                  372^4    370^6

Early Opening Calls: mixed

Top News

-- Chinese Soybean futures closed mixed, Meal lower, Oil and Corn higher.

-- The USDA progress report shows Corn harvest 81% complete vs. 88% last
year and 82% average.

-- Purdue University extension economist is looking for planted Corn acres
to reach 88 to 89 mil. acres  in 2007 vs. 78.6 mil. planted this past  year.

-- Corn spreads: MLP 7,000 CZ7/CZ, 2,000 CZ/CH,Dbank 1,000 CZ7/CZ, Fortis
1,500 CH/CZ

-- Barge freight steady weak: STL. 410 – 430     IL. River  480 – 500   Ohio
400 – 450

-- Funds were not big players Monday, as funds bought 2,000 Corn.

-- Volume was 249.1 with open interest down .994 to 1408.6

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

-- Outside markets:  metals higher, energies mixed, dollar lower against all
major currencies.

Cash Markets

            Bn Barge           Corn Barge        SRW Barge       HRW Track
12Pro          ILL RIV FRT

Nov       +49/51 F           +62/64 Z              +38/43 Z          +60/70
Z         490

Dec      +58/60 F           +63/66 Z              +40/45 Z          +62/72 Z
470

Jan       +62/64 F           +55/57 H              +35/   H          +55/
H          490

Truck                Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago                       -28 F     -6 Z      -45 Z

Toledo              -27 F     -18 Z    -45 Z

Dec ILL            -5 F      +10 Z              -6 Z                   -25 Z

TREND:

Volume still much slower than last week until the spread trade came late.
Hedging was the normal early with sell orders in beans and corn. Later in
the day some buying developed under the market. Crop report on Thur. May see
this type of trade persist over the next two days.

Wheat gained to day but appears to have been more on liquidation of
corn/wheat trade rather than any strength in cash?

Corn has every reason to break down more than it did today. Way too much
bullish rhetoric in wires over the weekend. May be that the production
reports Thur could be a disappointment if not cut to the Informa type
levels.



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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