Linn Group Morning Corn Comment

CHICAGO - Nov 13/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market was lower on Friday as continued to see some
selling pressure after it made 10 year highs on Wednesday before the release
of the USDA report.  Technicians said the corn market technically is still
over bot and the huge long fund positions will continue to weigh on this
market, especially when we don’t have any new/good news.  Funds were pretty
quiet selling app. 3,000 contracts by the end of the day.  The corn market
didn’t find any support on the sell off on Friday, possibly because of the
already long position and possibly because it was Friday.  The bears will
talk about the lower feed demands and lower export activity because of the
high prices, but the bottom line is that ethanol will be the driving force
for the near future.  The weather in parts of the northern Midwest was
delayed over the weekend because of rain and snow, but that should pick up
by the end of the week.  The bulls will point to the outlook for record low
feed supplies in the coming year as a reason to want to be long corn as well
as the demand by ethanol producers.  Their will be a risk premium built into
the corn market as the stocks get lower because any little hiccup could mean
disaster with so many users competing for product.  China restricting
exports on top of a record harvest is also looked at as bullish the corn
market.

eCBOT market was stronger overnight on pretty good volume with the Dec
closing almost 7 cents higher.  The corn market found some new buying after
the sell off we saw Thursday and Friday, probably users deciding that they
needed to get some more bot with Dec 25 cents off its highs on Wednesday.
Technicians said they thought the 340 area in Dec would hold, and we traded
down to 340 ¼ before rallying, so it will be interesting to see if we find
more buying today or the market will sell strength.  One veteran trader was
watching the corn trade last night as he watched the Bears glorious victory
of the NY Giants, and he said the interesting thing was there wasn’t any
sell orders above the market of any size.  Is this the reason for the rally,
or is it because the market knows you don’t want to step in front of the
train.  Keep an eye on option trade as there are some very big traders in
that market and they can dictate which way the market will go.  We are in
the middle of a possibly huge demand market and in the past, demand markets
are supported on any sell off from the highs.  We saw the Chinese markets
firm overnight and this may have been the reason for the rally in the eCBOT
night session.  The market will open higher and it will be interesting to
see where the market goes after the opening.  Big option traders tried to
sell premium on Friday but couldn’t get anything done, will that trade be
back this morning?

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 350^0    6^6                   352^2    340^2

ZCH7                366^4    7^0                   368^0    356^2

ZCK7                372^4    7^2                   373^2    362^6

ZCN7                377^2    7^2                   378^2    367^0

Early Opening Calls: higher 5 to 7c

Top News

-- Export News: Exports: South Korea and Japan in for Corn this week.

-- Chinese Corn futures closed sharply higher as cash Corn prices in
southern China have firmed appreciably in the last week.

-- Funds move to the sell side Friday but not a huge trade. Funds sold
3,000 Corn-- Corn spreads: Tenco 2,000 CZ/CH, JPM 2,000 CH/CZ, Fortis 1,000
CN/CZ, Fimat 1,000 CH/CZ

-- Amid rumors of export quota extensions, Ukranian president Viktor
Yushchenko spoke out against the controversial action.  He called the grain
export quotas "illogical" and noted that these actions could end up hurting
the country's international investment prospects.

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

-- Outside markets:  metals and energies lower, dollar higher against most
currencies

-- Volume was 294.3 with open interest up 2.8 to 1405.4

Cash Markets

-- CIF Corn  up 1 . Nov. +61 to +63,  Dec. +63 to +65, Jan. +50 to +54, Feb.
+50 to +54, March +52 to +55, Apr. +48 to +51. May +48 to +51

TREND:

The corn market is going down bid. The pricing is scaled down but there is
enough to absorb the pressure of small long liquidation and a local crowd
pressing for lager sell stops. The CZ is off the highs by 24 cents and will
have a hard time pressing down into the gap everyone wants to buy at 3.35.

KC wheat is trying its best to break down taking out the lows of the last
month on weakness today. Remember comments about stronger cash needed to
support wheat. It is happening. Seasonal increases in flour demand have the
mills reaching some for wheat. Western mills are up 15 to 20 cents from
levels paid on the first of Nov. The gulf is up 7 to 10 cents in the same
period.



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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