Linn Group Morning Corn Comment

CHICAGO - Dec 12/06 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn Update:  The corn market closed higher after selling off earlier in the
session after the release of the USDA report before the opening.  Corn
initially was unchanged/a little higher but quickly sold off as we saw funds
take more profits, but as beans started to push higher, corn followed to
close 2 higher in the March.  There isn’t any new news to push the market
much higher, but with the lighter volume, nobody wants to be caught short
the corn market.  The USDA report released before the opening was really a
non-event, showing a slight increase in world stocks, but that wasn’t
completely unanticipated.  We are starting to see the volatility/choppiness
associated with holiday markets and lack of fund activity.  The market made
3 week lows last week and now traders are looking to recover some of the
sell off.  Exports were quiet over the weekend with international grain
traders saying that So. Korea and Japan make a take a break after buying
corn last week.  Weather in Argentina seems to be supportive of the corn
market as they have been receiving timely rains, but it is still very early
in the growing session and hot weather is forecast for the next 5 days.

eCBOT market was stronger again overnight as we saw some follow through from
yesterday’s action with the March contract closing 2 ½ higher.  Volume was
decent to the light side at 9,000 contracts, but today should be a very
interesting day.  No new news out this morning as the markets start to talk
about the holidays and Christmas parties.  Be careful with a higher opening
today, no reason to see corn press into new highs with no new news out this
morning.  A higher Monday trade is usually followed by a lower Tuesday
trade.  Beans could be the leader in the grain complex so corn could follow,
but don’t look for corn to lead the market higher.  Funds are still the wild
card as they have on huge long positions and have been taking some profit
before the end of the year, but will still remain long the corn market until
further notice.  Last year in December we saw the markets rally on
anticipation of new fund money coming into the markets around the 1st of the
year, so it will be interesting to see if we get the same action this year.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ6                 359^4    4^0                   359^4    356^2

ZCH7                373^6    3^0                   374^6    371^2

ZCK7                379^6    3^2                   381^0    377^0

ZCN7                383^6    2^6                   385^2    381^0

Early Opening Calls: 3 to 5c higher

Top News

-- Export News: Taiwan bought 60,000 mt. US Corn for Dec/Jan.

-- Export News: Taiwan tendering for 23,000 mt. US Corn and 12,000 Soybeans
for Jan.

-- Argentina’s Ag Secretariat estimates Corn planting at 81% complete vs.
79% last year.  The report also said the crop is making very good progress
due to recent rains.

-- Fund trade moderate Monday. Funds Bought 1,000 Corn

-- Corn spreads: DBank 1,000 CH/CZ7, Fortis 1,000 CZ7/CH.

-- Deliveries:  Corn  264   ADM stopped  180

-- Chinese Corn futures closed higher again being pushed higher by stronger
cash values.

-- Volume  was 143.7 with open interest down .330 to 1376.3

-- 6-10 day forecast  shows above normal temps and normal to above precip.

-- Outside markets:  energies are higher, metals are mixed, dollar is mixed
against major currencies.

Cash Markets

-- CIF Corn off 1-2.  Dec. +40 to +43, LH Dec. +42 to +45, Jan. +48 to +50,
Feb. +49 to +52, March +49 to +54, Apr. +44 to +47. May +44 to +47

TREND:

Corn is a different situation with a great deal of uncertainty driving
trade. We do not really have a good handle on the total US production yet.
The demand drive has turned inwards to the ethanol plants---and export
demand has had so many surprises that it is also an uncertain. Appears we
are looking at potentially tighter stocks than shown by the USDA today. They
need to increase exports at least. If I am correct that this is offset by
lower domestic feeding, it should show in the Jan 12 stocks and be confirmed
in the Mch stocks.



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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