Linn Group Morning Corn Comment

CHICAGO - Dec 11/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market went lower on Friday in anticipation of the
USDA report to be released this morning.  Friday’s sell off came after we
saw a firmer dollar, weaker crude oil, and falling wheat prices.  We had
funds pretty quiet, only selling 2,500 contracts, with most traders just
trying to position themselves for the USDA report.  The market was weaker
after Thursday higher move, with traders taking profit and technical
selling.  Volume was very light on Friday, only 123,000.  Technically, corn
had only its second lower weekly close since the rally started back in
August and the March contract closed below the 20 day moving average for the
first time since the middle of September.  Stronger exports overnight and
early Friday failed to deliver a higher market probably because rumor had
Taiwan passing on US corn, but exports are still expected to remain strong.
Chinese corn prices are higher and the USDA confirmed that So. Korea was
into the US for 110,000 tones of US corn.  So. American weather will become
more and more important, especially in Argentina where the bulk of corn
outside of the US is grown.  Weather forecasters are reporting warm/dry
weather the next 5-7 days, but they have very good soil moisture down there,
so the damage should be muted unless it extends.

eCBOT market was up overnight in anticipation of the USDA report on very
light volume.  Well, the USDA report was sharply neutral probably providing
little direction to the corn market today.  Look below for the specific
carry out numbers, but mostly, the numbers were right inline with
expectations.  Overnight, the March contact closed 2 ½ cents higher after
being over 4 cents higher at one point last night.  The corn market should
open a little higher based on the overnight market, but it seems like it
will be difficult to get any follow through without any new news.  It seems
like the corn market should chop around today and possibly for the rest of
the month or until we start to get news out of So. America.  The funds will
decide which way corn will go this winter, with another report out over the
weekend saying money will come out of energies and into grains this
winter/spring.  Congress passed an extension of the 54 cent per gallon
tariff on imported ethanol until 2009.  This tariff was set to expire
September 2007.  Look for the market to struggle today to move significantly
higher, 5-7 cents, unless the funds get involved.  We are starting to see
lighter and lighter volume, probably an indication of the approaching
holiday markets.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 357^2    3^0                   357^4    352^0

ZCH7                371^0    2^4                   373^0    366^0

ZCK7                378^0    3^4                   378^0    372^2

ZCN7                381^0    2^2                   382^6    376^0

Early Opening Calls: mixed to slightly higher, post report

==USDA December Crop Data==

**US Dec. Corn 06/07 Carryout: .935 bln bu. ; est. 0.94; Nov Rpt 0.935

**World 06/07 Corn Carryout: 92.7 mmt; Nov Rpt 90.0

**Dec. Argentina 06/07 Corn Output:  19.0 mmt; Nov Rpt 17.5

**Dec. S Africa 06/07 Corn Output:  10.0 mmt; Nov Rpt 9.5

**Dec. China 06/07 Corn Output:  143.0 mmt; Nov Rpt 143.0

Top News

-- 1.106 mln 06/07 grain export quota resolution introduced by Ukraine
Gov't.  500,000 mt of corn, 600,000 mt of barley, 3,000 mt of wheat, 3,000
rye are included in the resolution.

-- Copa-Cogeca: European Union grain production estimated at 244.4 mil tons,
-0.44% lower than Sept est., and -4.65% decline since last year.

-- Congress passed a  extension on the 54 cent per gallon tariff on imported
Ethanol until 2009. The tariff was set to expire in October 2007.

-- CBOT Deliveries:  Corn  498  ADM stopped 6  Tenco  52

-- Commitment of Traders report with Options as of December 5th shows Funds:
Corn Long 279,229 off 5,236

-- Dallian China Corn futures closed very strong as the cash price in the
northeast was pushed higher by Corn processors trying to source supplies.

-- Funds stayed on the sell side Friday selling: 2,500 Corn.

-- Volume was 123.2 with open interest down .293 to 1376.6

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

-- Outside markets:  Metals are mixed, energies lower, dollar slightly
higher against most currencies.

Cash Markets

-- CIF Corn steady.  Dec. +42 to +45, LH Dec. +45 to +47, Jan. +50 to +53,
Feb. +50 to +55,March +50 to +53, Apr. +45 to +46. May +45 to +46



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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