Linn Group Morning Corn Comment

CHICAGO - Dec 1/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  Corn futures closed higher on Thursday on a wild last 30
minutes of trade.  Corn rose to a 10 year high on a rebound from profit
taking earlier this week.  Traders speculated that corn futures got a lift
from month end positioning, fund buying and a weaker US$.  The weaker US$
brought fresh investment fund buying into the grain markets as they expect
US exports to be cheaper to the rest of the world.  Funds bot app. 4,000
contracts with the leader being the bull spreads which widened out.  Strong
export sales also helped the market climb higher as we saw another 1.0 mil
in sales and we are seeing that same number week in and week out.  Stories
out of the Far East have some Asian buyers scrambling to buy corn through
March because in the past they have bot corn from China and Argentina which
have mostly shut down exports and a substitute for corn, feed wheat, isn't
available this year.  The same buyers are trying many non-traditional
sources for corn supplies.  Prices on the eCBOT platform dropped 10 cents
late in the day on what is rumored to be a fat finger error by a broker.
Rumor has him selling 2000 March corn at 377, when it should have been 300
Dec corn at 377.  This caused the 10 cent drop on the screen but not in the
trading pit.  This just shows what can happen when trade happens
electronically and it just shows the velocity and volatility in today's
markets.  BE CAREFUL entering orders.  Loss was estimated at $1.5 million.

eCBOT market was lower overnight on light volume with March closing down
almost 2 cents.  After yesterday, most traders are going to sit back and
double check every order they place on the computer after yesterday's error
and subsequent market moves.  Nothing has really changed fundamentally, corn
is still a demand market with the rest of the world really having to come to
the US for corn if they need it before March when harvest from Argentina
hits the world market.  This demand for corn is driving up other feed grain
prices, which will eventually come up to corn prices, and then extend corn
again.  It is December 1st today and there are rumors we will have new
investment fund allocations this month with the question remains where are
the sell orders going to come from to stop the buying.  I think you look for
corn to open lower this morning but find strength later in the day.  I don't
see anything that can push the corn market lower and if we get another round
of fund buying, watch out.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 374^4    -2^4                  377^6    374^4

ZCH7                388^6    -1^6                  392^0    388^0

ZCK7                392^0    -1^6                  396^0    392^0

ZCN7                396^2    -1^6                  399^0    395^6

Early Opening Calls: 2 cents lower

Top News

-- Export sales continue rather robust considering the level of flat price
and firming ocean freight markets Corn sales were 1.021 TMT or 40 mil bu old
crop along with 60 TMT new crop

-- Deliveries: Corn 1,009 total issuers; next date 11/31/06

-- Deliveries: mini-Corn 0 total issuers

-- USDA FAS report suggests that Taiwan small imports of Chinese corn may
impact US exports to Taiwan. USDA estimates from various sources that
volumes could be between 2,000 & 10,000 mt, but other sources say January
could see up to 100,000 t offered to Taiwan if the ban would be lifted by
Taiwan.  Taiwan in the past has briefly lifted the restrictions.

-- According to the USDA, only 1% and 3% of US CRP ground is eligible to be
released in major corn/soybean and wheat growing states, respectively, for
the upcoming growing season.  A USDA report noted that of the 36.7 million
acres of Conservation Reserve Program (CRP) land, only 360,000 acres of
Iowa, Illinois, Indiana, Nebraska, and Minnesota farmland were eligible for
release in time for '07 corn/soybean planting

-- South Korea rejects another shipment of US meat;  small bone fragment
found in the beef - second rejection this week

-- Volume was 282.8, with open interest down .957 to 1394.7

-- 6-10 day forecast shows below normal temps and precip

-- Outside markets:  metals lower, energies lower, US$ mixed against all
currencies

Cash Markets

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

Nov       +56/58 F           +57/59 Z             +42/45 Z          +57/65 H
415

Dec      +59/61 F           +60/63 Z              +45/48 Z          +57/63 H
420

Jan       +63/64 F           +52/54 H              +38/   H           +64/
H          450

Truck                Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago                       -26 F     -3 Z      -40 Z

Toledo              -16 F     -20 H   -40 Z

Dec ILL            -8 F      +13 Z                 -9 Z                -25 Z

TREND:

Market can still be swayed by delivery maneuvers but most of the trade got
comfortable that there was no big deliveries coming in corn. Spreads seem to
have a clear way to gain.

Flat price corn overcame diversity to close very firm---new highs in most
contracts. Is lead by the fronts in a manner that says the bull spreads are
back in vogue---in spite of current developing weakness in cash basis.

The wheat market should continue to be led by KC but Chi is coming very
close to breaking out of the down side channel of the last 90 days. If this
happens, could lead to a 3 to 45 cent rally in wheat led by Chi?



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.