Linn Group Morning Corn Comment

CHICAGO - Nov 10/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Well, we saw the pull back in corn that many have been
expecting, but I don't think many traders thought it would happen on the
back of a bullish USDA report.  The market didn't open anywhere near the
opening calls.  It looks like it was another example of buy the rumor, sell
the fact as we saw the corn market run up early in the week in anticipation
of the report.  Volume was very heavy again with app. 42,000 contracts
spread out of the Dec.  Funds sold only app. 4,000 contracts.  Option
volatility has been pumped up into the report but it was down 15% in the
nearby months, which one veteran traders said he had never seen in the past.
Technical indicators point to an over bot market and the corn bears will
point out the reduced 2006/07 forecast of exports and corn for feed by 50
million each.  Exports sales were very strong again, but overlooked by the
UDSA report.  Farmers are trying to wrap up harvest, but wet weather in the
Eastern belt holding some back from finishing.

eCBOT market was lower again overnight on decent volume, closing 2 cents
lower in the Dec.  Today should be a very interesting day as we find out
what the corn market is made of and whether we have users buying on weakness
or whether the funds decide to sell some of their longs.  Traders seemed to
be throwing out all kinds saying yesterday, such as when we have bullish
news and the market can't follow thru to make new highs, a top is in or that
this sell off is a bear trap.  Corn is definitely the leader of the grain
complex, but if wheat decides to breakdown like we saw yesterday, corn is
sure to follow, but probably at a much slower pace.  China's booming starch
industry has raised fears in the marketplace that despite a record harvest,
a squeeze on domestic corn supplies has prompted China to limit exports.
Another indication of China importing corn next year, or is it another
example of China building over capacity?  I look for the corn market to open
lower and find user buying down below, assuming we don't have wheat down 15
cents.  The record long fund position is a heavy burden and if corn gets
significantly lower, another 5-7 cents, we could see further fund selling.
The market needs a breather and we will probably see sideways trade with a
lot of spreading again today.

eCBOT Overnight:

Contract            Last      Change High      Low

ZCZ6                 348^0    -2^0      350^2    346^0

ZCH7                364^2    -1^6      365^6    361^4

ZCK7                371^0    -1^2      372^6    368^2

ZCN7                375^6    -1^4      377^0    373^0

Top News

-- Top Ukraine government officials expect grain export quotas to continue
until June of 2007

-- Year to date Corn Export Sales:  854 mil bu, including a beefy 75.9 mil
bu this week.  Last year at the same time, 611 mil bu were sold.

-- EU market official says 21,784 mt of Corn have been sold from
intervention stocks Thursday

-- Corn processing construction boom in China expected to consume 35-40
million tons of corn in the Northeast region alone, acc. to analysts.
Current production for the country is 26.5 million tons.

-- Volume was 420.7 with open interest at 1402.8, down 2.5

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

-- Overnight News:  metals lower, energies higher, dollar mostly lower
against outside markets.

Early Opening Calls: 2-3 cents lower

Cash Markets:

CIF Corn  steady . Nov. +59 to +61,  Dec. +62 to +64, Jan. +50 to +53, Feb.
+50 to +53, March +51 to +54, Apr. +46 to +50. May +46 to +50

River house bids steady to weaker with STL. off 2 at +12, Morris Il. River
off  1 at -12, Peoria unch at -7.

NS Corn:  Nov. +7   Dec. +11  JFM +5         Evansville  CSX  +10

TREND:

The inability of the market to carry forward led to a move to liquidate
longs. This should normally carry for 2 to 3 days.

We will watch to see if the market develops more momentum overnight.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.