Linn Group Morning Corn Comment

CHICAGO - Dec 7/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market finally got the sell off on year end profit
taking that everybody seemed to want to talk about, but couldn't seen to
make happen.  We had seen the open interest fall app. 13,000 contracts since
Monday and with the funds selling 10,000 contracts yesterday, we had some
full fledged fund liquidation.  The selling started in the wheat market but
soon carried over to the corn and beans with the March contract closing 12
cents lower, near the lows of the day.  The market is reeling from a huge
long position and as I mentioned yesterday, as soon as we got through the 20
day moving average, the market seemed to find more stops and push it lower.
Many of the funds were probably selling out some of their positions trying
to capture some year end gains since the funds have been long for most of
the summer and fall.  The bottom line is that there wasn't any new news,
just rehashing old news, such as, funds are going to reallocate away from
grains, funds are going take profit, China is going to delay exports, the
price of corn has bot enough acres for next year, etc.  Analysts are
predicting and increase of 5-10% increase in corn acres in 2007, but
remember, those numbers can change by next spring when farmers actually
start planting.

eCBOT market closed app. unchanged overnight in the March contract on pretty
good volume. More talk out of China has them possibly delaying corn
shipments till March.  One international cash trader said that a foreign
importer would be coming to the US for corn needs to replace China.  Along
those lines, we had So. Korea buy 6 cargoes of US corn overnight.  Weekly
export sales were inline with estimates at 812,700, estimate was 800,000 - 1
mil.  With the USDA monthly supply and demand report to be released on
Monday, the market will probably make its move today to position itself for
the report.  Today's trade will be interesting because now that we have
gotten our break and we are 30 cents off the highs, will corn find some
buying or we will see continued fund liquidation.  The corn market is called
to open unchanged, maybe a little higher.  China news should be supportive
of the market, but the bears will try and continue to push the market lower.
Option activity yesterday points to a lower market.  I would look for a two
sided mixed trade today unless we get some big fund activity.  The USDA
report to be released on Monday will be in the back of traders minds, even
if it isn't one of the bigger reports.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 352^6    -0^2                  352^6    349^2

ZCH7                365^6    -0^2                  366^2    362^0

ZCK7                372^0    0^4                   372^0    367^6

ZCN7                376^0    0^0                   376^0    372^0

Early Opening Calls: steady to 1c higher

Top News

**USDA Corn 06/07 Export Sales Net: 812,700 mt; expected 800,000 - 1.0 mln

**Stats Canada Production 2006:  Corn 9.27 mil tons, -2.0% from '05

-- Export News: USDA reports private sale of 110,000 mt 06/07 Corn to South
Korea

-- Export News: South Korea bought 440,000 mt. of Corn for  Apr/June with
330,000mt. likely US

-- Export News: Israel bought 50,000 mt. US Corn

-- More talk out of China of delayed Corn shipments. Exporters are now
saying delays shipping corn exports could extend into March. One industry
source was quoted as saying a international exporter has started to replace
Chinese cargoes with Corn from the US.

-- Taiwan will tender for 40,000 to 60,000 MT of U.S. corn Friday.

-- Corn spreads: Tenco 1,000 CN/CZ7, JPM 300 CZ7/CH, Fimat 500 CN/CH

-- Deliveries: Corn 1,345 thru 11/30/06 Bunge stopped 6, Tenco 110

-- volume was 209.9 with open interest up 2.5 to 1376.7

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

-- Outside markets:  metals and energies mixed.  Dollar is mixed against
major currencies.

Cash Markets

-- CIF Corn steady.  Dec. +41 to +44, LH Dec. +44 to +47, Jan. +49 to +52,
Feb. +49 to +53, March +49 to +52, Apr. +45 to +46. May +45 to +46

TREND:

The corn market has developed some bears in not being able to hold the
reversals today. Certainly closed poorly on the days lows off 13 cents. But
we have now traded 28 cents off last week's highs. This is the deepest break
since the rally started last Sep. The market will not develop a negative
trend in our opinion. Liquidation is driving the trade and it could be a
mistake to stand in front of the break but we advised users to take more
extended coverage today. Some of the negative bias that has developed is
tied to the inability of the market to follow through on new highs in
deferred contracts last week. However, the market still has to defend the
new corn acres that have been bot---they could be lost again if CZ7 sells
off too much vs. SX7?



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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