Linn Group Morning Corn Comment

CHICAGO - Nov 9/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  I guess you can say the corn market surprised most traders
again yesterday when it rallied another 2% to decade highs before selling
off the highs but still closed 6-7 higher.  It is unusual to see this much
flat price action before a USDA number.  Most traders I talked to said they
expected heavy spread trading but little flat price action into the USDA
report released this morning.  The outlook for lower supplies in corn pushed
the corn market higher on technical buying as well as many users finally
realizing that if they have needs to be met in the near term, they are going
to have to go after these higher prices.  Fund buying in corn was estimated
at 8,000-10,000 contracts on a new record volume of app. 475,000 contracts,
but almost unchanged open interest.  The unchanged open interest probably
shows the huge spreading going on vs. the Dec06.  We continue to see money
and more money pouring into commodity investment funds and that money is
pouring into corn.  As one trader said, investor buying remains the biggest
reason for the continued move higher in corn, but we also have user pricing
corn on any down move and now they are in buying corn at higher levels.
Ethanol continues to be one of the biggest drivers for the corn market,
especially with that Iowa State ethanol report released this week saying
ethanol production was profitable up to $4.05 corn and that DDG, a
by-product of corn produced ethanol, could possibly be used as fuel.

eCBOT market continued higher another 4 cents overnight on good volume.
USDA report released this morning came in below estimates with production at
10.75 vs. estimate of 10.842, and 151.2 bpa vs. estimate of 152.6.  These
numbers will be bullish the corn market, at least on the opening with calls
anywhere from 5-15 higher this morning.  Corn carryout was .935 vs. estimate
of .912 which is a little above the estimate, mostly on reduction of live
stock feeds.  Rounding out the numbers this morning, weekly export sales
were 1.929 mil vs. an estimate of 800,000 to 1.2 mil.  This number is a lot
higher than the estimates, but veteran traders said the buyers were pushed
into buying corn before the USDA report, so it could be artificially high,
but nonetheless, it is another bullish element to corn.  Corn is the
undisputed leader of the grain markets now and the interesting price action
today will be where corn ends up at the end of the day.  Everybody is
calling corn higher this morning, but we are hearing a lot of talk of
selling corn 10-15 higher.  It goes back to the fundamental question of who
is going to buy corn at $4.  We should have another gap opening today, so it
will be an interesting day.  The December corn market is 10-15 higher this
week and 40 cents higher from a week ago, so maybe the bullish report is
already built into the market, but the funds are the wild card.  If the
investment funds want the corn market to go higher, they have the money and
the power to push it higher.  It should be an interesting day today, hold
on.  Big surprise today

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 362^2    4^4                   362^2    357^4

ZCH7                376^4    3^0                   377^0    372^2

ZCK7                382^6    2^2                   383^2    379^0

ZCN7                387^4    3^0                   387^4    383^2

Early Opening Calls: higher 5 to 15c - post report

--USDA Nov. Crop Production--

US

**US Nov. Corn Yield: 151.2 bpa; est. 152.5 bpa; Oct Rpt 153.5 bpa

**US Nov. Corn 06/07 Crop Prod: 10.745 bln bu.; est. 10.8; Oct Rpt 10.905

**US Nov. Corn 06/07 Carryout: 0.9359 bln bu.; est. 0.90; Oct Rpt 0.996

World

**World 06/07 Corn Carryout: 90.00 mmt; Oct Rpt 89.54

**Nov. Argentina 06/07 Corn Output:  17.5 mmt; Oct Rpt 17.5

**Nov. S Africa 06/07 Corn Output:  9.5 mmt; Oct Rpt 9.5

**Nov. China 06/07 Corn Output:  143.0 mmt; Oct Rpt 141.0

--USDA Weekly Export Sales--

**USDA Corn 06/07 Export Sales Net: 1.929 mt; expected 800,000 -1.2 mln

Top News

-- Export News: South Korea bought 165,000 mt. Corn,  55,000 US, 110,000 US.
,Chinese or South American for Mar/May.

-- Export News: Taiwan bought 23,000 mt. US Corn

-- Funds all on the buy side Wednesday buying 6,000 Corn.

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

-- Corn spreads: Fimat 3,000 CH/CZ, Tenco 3,000 CZ/CH, FCS 1,500 CH/CZ, ABN
1,000 CH/CZ.

-- Volume was 475.9, with open interest down .477 to 1406.3

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

-- Outside markets:  metals and energies higher, dollar is mixed vs. most
currencies, higher against the yen

Cash Markets

-- CIF Corn  off  2 . Nov. +59 to +61,  Dec. +62 to +64, Jan. +52 to +56,
Feb. +52 to +56, March +52 to +56, Apr. +46 to +50. May +46 to +50



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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