Linn Group Morning Corn Comment

CHICAGO - Dec 6/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market closed higher yesterday on fund buying on very
light trade.  Corn opened lower and continued lower in the morning only to
rebound late in the day as we saw fund buying come into the pits,
2,000-3,000 contracts, and carry the corn higher.  The market volume was
very thin as just a little fund buying was able to move March corn almost 8
cents off the lows.  The rally that we saw today just showed the corn market
will rebound after selling off, just because the corn market still has
strong demand for export, ethanol and livestock users.  This corn market
will remain very volatile, but good long term demand will keep away any
aggressive selling by the funds or a large liquidation.  We have probably
seen some liquidation or profit taking this week, but the long term
prospects for corn will prevent them from selling out all their position.
Cash traders said that exports remain strong and it will be interesting to
see what the weekly export sales report tomorrow morning.  Floor traders
continue to hear talk of fund re-allocation because of the big run up in
corn and we will probably continue to hear this talk the rest of the year.
Some traders are wondering if we are into the holiday markets as volume has
been very light the last week or so.

eCBOT market was weaker again overnight on decent volume with the Mar
closing almost 4 cents lower.  It will be another interesting day today as
many of the traders I talked to yesterday afternoon thought we would see
more buying come in overnight and push corn higher, but the opposite
happened.  We seemed to find support yesterday on the corn sell off and it
looks like we are going there again today so we will see if that buying is
there today.  Wheat seemed to be the leader overnight, down almost 10 cents
at one point only to close 7 lower.  The funds are still the leader in the
grain complex and the with no new news out this morning, the fund activity
will probably dictate if the corn complex goes up or down.  Traders seem to
want to talk about the 370 area as being the support for the Mar contract
and I would look for stops if we get below 370.  Weather in So. America
seems to be good across the corn and bean region, so that is a non-factor.
The corn bulls are fighting the bearish news of possible new corn acres,
weak crude oil prices, weak metals prices, and a firmer US$.  I think the
market will be lower on the opening but it will find buying lower and
proceed to trader higher on the day, but with little fresh news, I don't
think we have any big moves today.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 362^4    -3^6                  365^4    362^0

ZCH7                374^2    -3^6                  377^6    373^4

ZCK7                380^0    -3^6                  383^2    379^4

ZCN7                384^0    -3^4                  387^0    383^4

Early Opening Calls: lower

Top News

-- China's National Grain and Oil Info Center estimated the 2007 Corn crop
at 145 mmt. vs. 142 mmt.

-- The Federal Energy Information Administration released a report Tuesday
that forecast US ethanol demand to hit 11.2 bil. gallons by 2012 vs. the 7.5
bil. required by law.

-- Supporters in the US Senate of farm disaster aid covering 2005 & 2006
losses fell short of bringing the aid forward and the matter will have to
wait until the new Congress convenes in January 2007

-- Hungary's grain harvest for 2006 estimated between 14.5 to 15 million
tons, with 8.35 mil tons of corn (7% lower than

last year's record crop)

-- Fund trade mixed Tuesday. Funds Bought  2,000 Corn

-- Corn spreads: ABN 1,000 CZ7/CH, IA 300 CK/CN, UBS 300 CH/CZ7

-- Deliveries: Corn 795 thru 11/22/06  no stopper

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

-- Volume was 163.2, with open interest down 3.2 to 1374.4

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

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

-- CFTC announces in press release "Supplemental Report" to weekly
Commitment of Traders beginning Jan. 2007. The new report will show
aggregate futures and options positions of Noncommercial, Commercial and
Index Traders in 12 selected agricultural commodities. Positions reported in
the new "Index Traders" category will be drawn from both the current
Noncommercial and the Commercial categories. Coming from the Noncommercial
category will be positions of managed funds, pension funds and other
institutional investors that generally seek exposure to commodity prices as
an asset class in an un-leveraged and passively-managed manner using a
standardized commodity index. Coming from the Commercial category will be
positions of entities whose trading predominantly reflects hedging of
over-the-counter (OTC) transactions

Cash Markets

CIF Corn off 2 to 4. Dec. +41 to +44, LH Dec. +44 to +47, Jan. +49 to +51,
Feb. +50 to +53, March +50 to +53, Apr. +44 to +46. May +44 to +46

TREND:

The corn market has reversed off the $3.70 support area after another
20-cent break. However, we could be developing a s/t range as we move into
these typical choppy December markets. The long term trend is still bullish
with projections for new highs but the s/t trade very likely will have
problems as we test the highs from $3.85 to $3.90. Expect some liquidation
there. The corn spreads have cooled off as well but the ch7-cn7 should hold
in this area and would stay with that bull spread, risking 14.

Wheat is also stalling in both the KC and Chicago markets with a range
dominated trade already. Kc has been that way for awhile and should continue
to respect this $5.25 to $5.30 shelf of support. Buy in that range and risk
a close under $5.20. The $5.45 to $5.50 area is the near term liquidation
target. No reason to change until we can see a close outside of that $5.20
to $5.50 pattern. The kwh-wh also suggests more of a choppy trade with our
break under 20-cents. Look for a test of the 10-cent area but that should be
about it. Meanwhile, Chicago is settling down into a $5.10 to $5.30 trade
give or take a nickel. Clearing the spike highs over $5.25 and $5.30 should
be tough with this current trade. But downside has limitations with last
week's break to $5.00 handling our near term slide. The only reaction has
been in the wheat-corn spread where we finally saw a corrective rally of
25-30 cents. But even that should have trouble as we approach the $1.45
to$1.50 area on the March. Support rests back at $1.25.



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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