Linn Group Morning Corn Comment

CHICAGO - Nov 14/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn closed slightly lower after selling off from the higher
opening and the mostly sideways trading throughout the day.  The market
opened higher off of the Sunday night action, light volume, lack of sell
orders, but it couldn't find any further support to push it up into new
highs.  The sell off in the bean complex also contributed to the sell off in
corn.  There was some light fund selling into the early rally, but at the
end of the day, funds were about even.  Volume was pretty heavy with a lot
of spreading out of the Dec06.  Export demand remains very brisk with talk
that Japan and So. Korea could be into the US for corn this week with the
break in prices off their highs and the lack of exports coming out of China.
The market still thinks the tremendous expansion in exports and the ethanol
industry will support prices regardless of how big a crop we have this year.
Even though weather is now on the back burner, some traders are concerned
that we are going to lose some yields in the northern corn belt because of
late harvest and the wet weather that keeps delaying harvest.

eCBOT market was slightly higher overnight on light volume with a lot of
spreading.  Traders said the market may be taking a breather the last 2 days
as the market has sold off into support after the run up last week in
anticipation of the release of the USDA report.  The release of the
Commitment of Traders report on Monday after the close showed a long
position of funds of 285,910, up 20,378.  This huge long position will start
to wear on the market if the market doesn't start to move higher or if we
continue to lag and trade sideways.  A sideways trade may sound innocent
enough, but it could cause some funds to liquidate their longs because of
lack of follow thru.  There was an article out overnight about the
California Public Employee Retirement Pension Fund has allocated $500
million to be invested in commodities and commodity related stocks.  Don't
know if or how much of this will be allocated to the grain markets, but
would have to assume there is some money allocated to corn because of the
ethanol play.  Market should open unchanged maybe a little higher with the
market looking for support on any attempt to sell off the market.  Continued
fund buying and commercial pricing will have to support this market and if
it doesn't, we could see increased fund selling.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 342^6    0^2                   344^6    341^4

ZCH7                358^6    0^2                   360^0    356^6

ZCK7                363^4    0^6                   364^0    361^4

ZCN7                366^4    -1^0                  368^4    365^0

Early Opening Calls: steady/+1c

Top News

-- A private Ukrainian grain analytical firm released its November grain
forecast for the country, as they now expect the crop to be +0.5% better
than the previous projection.  The bulk of the increase came from better
than expected corn yields.  The new estimate was pegged at 35.1 million
tons.  This still represents an 8% decline from last year's harvest.

-- Chinese Corn futures are closed  higher this morning, Soybeans and Meal
lower.

-- The Commitment of Traders report with Options as of  November 17 shows
Funds  Corn  Long  285,910  up  20,378

-- The USDA weekly crop progress report shows Corn harvest 90% complete vs.
94% last year and 90% average.

-- Fund trade very slow in Corn and Wheat Monday. Funds Sold 1,000 Wheat,
Even Corn.

-- Corn spreads: MLP 2,000 CH/CZ, FCS 3,000 CH/CZ, JPM 2,000 CH/CZ, Caly
2,000 CH/CZ Fimat 1,500 CH/CZ, FCS 2,000 CZ/CH, FCS 2,000 CZ/CH, JPM 2,000
CZ/CH, Tenco 1,000 CZ/CH

-- Volume was 330.8 with open interest up 7.8 to 1413.5

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

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

Cash Markets

-- CIF Corn  up 1 to 2 . Nov. +62 to +64,  Dec. +64 to +66, Jan. +54 to +57,
Feb. +53 to +57, March +52 to +55, Apr. +48 to +51. May +48 to +51

TREND:

The corn market was unable to penetrate the 3.40 to 3.34 gap in Dec corn
overnight and bounced off that chart level. The rally was not able to follow
through either---back to taking some time to rub off the overbought
conditions of this market. Not able to break down and not able to rally
means that we continue to soften some but the real trade is volatility leak.
Both puts and calls will continue to weaken. New crop contracts continue to
have heaver farmer selling.

We ran out of selling in the spreads today until right on the close. But the
trade for most of the day in CZ/CH and WZ/WH tightened from levels that
traded Fri.



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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