Linn Group Morning Corn Comment

CHICAGO - Dec 4/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market slid lower on Friday on profit taking after
the market reached fresh 10 year highs on Thursday on month end buying by
funds.  We have seen the corn market run up a lot and very quickly.  A lot
of bullish news has been built into the corn market and with prices
approaching the magical $4 level, there was some talk of the market trying
to make a top for now.  As I have mentioned in past writings, the options
pit is where many people should look for market direction in the corn
market.  We saw some of the bigger players buying puts and selling calls on
Friday, looking for the market to retreat.  We had heavy deliveries against
the Dec contract which is bearish and we had outside markets, metals and
energies lower.  Volume was pretty light at only 160,000 contracts.  The
Funds remain very long the corn complex, so the market is going to have its
sell offs as the market try’s to go higher.  A weaker dollar and the demand
by exporters, ethanol producers and feed producers are going to help support
the corn market on any significant sell off.

eCBOT market was lower overnight on average volume, with the Mar closing 5 ¼
lower.  Traders don’t see any new news out this morning so the sell off is
probably just a continuation of the sell off we saw on Friday.  One rumor
going around has the USDA making it easier for farmers to take land out of
the Conservation Reserve Program which will weigh on prices, but many
traders have said you won’t be able to grow very good corn on this land
regardless.  It will be an interesting day in corn today to see how it
responds to the sell off we have seen again overnight.  I would think that
we will find buying down at these lower levels, but how much lower is the
big question.  Even after last night, we are only 10-12 cents off the highs
from last week.  Export numbers continue to support the corn market and
there doesn’t seem to be any reason to think that won’t continue with the US
being really the only place in the world to buy corn, probably into March
1st.  Look for the market to open lower and find buying, wouldn’t be
surprised to corn close higher on the day.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 367^6    -6^2                  369^4    367^6

ZCH7                381^6    -5^2                  383^4    381^4

ZCK7                386^4    -4^6                  387^6    386^4

ZCN7                389^6    -5^0                  391^6    389^6

Early Opening Calls: 3-5 lower

Top News

-- Export News: South Korea will be in for Corn this week, Japan for
Soybeans.

-- The head of India’s starch association says India’s Corn exports in
2006/07 could increase to 1.5 mmt. vs, 400,000 mt. sold in 2005/06.

-- A CFTC spokesman said Friday a report on a revamped Commitment of Traders
report including information on Hedge Funds will be released in the next two
weeks.  The CFTC in June said it was looking at it’s weekly report as many
trade groups were asking the agency to include a category  for Index Funds.

-- The Commitment of Traders report with Options as of November 11 shows
Funds:  Corn  Long  284,465  off  6,317

-- A official with the US Grain Trade Council in China says that China’s
November Corn exports will be much lower than expected and December exports
may be significantly below expectations.

-- Deliveries: Corn: 1,181 thru 10/31/06  no stopper

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

-- Volume was 161.3, with open interest down 3.06 to 1387.5

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

-- Outside markets:  energies lower, metals mixed, dollar slightly higher.

Cash Markets

-- CIF Corn steady off 1.  Dec. +44 to +47, Jan. +50 to +54, Feb. +53 to
+56, March +50 to +55, Apr. +47 to +49. May +47 to +49

TREND:

Corn continues its bull swing with a new high close on the daily, weekly and
monthly charts. Tough to find fault there, although we are quickly
approaching the magical $4.00 level which will enhance the volatility of
this trade. Counts do project ch to $4.22 but as we’ve seen this week, 10-15
cents swings will be just the norm at these lofty levels. It’s just a bit
harder to stay with the bull, but no sign of a top for the corn market just
yet. We have also seen a turn in the wheat markets this week with Chicago
leaving the $5.00 level and KC trying to bounce out of its range to the
topside. Part of this activity is being supported with our rebound in the
wheat-corn spreads. This has wh-ch capable of testing the $1.50 level after
our recent extended slide to $1.20.



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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