Linn Group Morning Corn Comment

CHICAGO - Jan 3/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market on Friday was higher with follow through buying from
Thursday and the strong export sales number.  The March contract was almost
2 higher with the back months almost 5 cents higher.  Some traders wanted to
say the rally was not only the strong export sales, but also some traders
not wanting to hold large short positions into the long holiday weekend in
case the funds were in buying on Monday and Tuesday night.  Remember, there
was no trade on Tuesday during the day.  Traders are still split on what the
investment funds will do this New Year, will they be buyers or sellers of
the corn market.  The outlook in China remains very strong for corn, but we
will see more corn on the market for sale as prices go higher and the
government releasing stocks, albeit at higher prices than a couple of weeks
ago.

eCBOT market was unchanged on Monday night and then 8 cents lower on Tuesday
night.  Traders this morning want to blame the sell off last night on profit
taking and traders trying to get ahead of what they feel will be investment
fund liquidation for the New Year.  The sharp drop in wheat also contributed
to the sell off in corn.  The weather forecast in So. America remains very
conducive with growing crops with analyst down there saying the crops look
good and the cooler weather will plenty of moisture should help production.
Traders this morning will be looking for the corn market to open lower,
possibly 8 lower, but they will look for support from users.  The investment
funds remain the wild card as we should see them show their intentions, or
at least start to show their intentions, by the end of the week.  Keep in
mind the markets the last 2 nights have been kind of weird and this 8 cent
break is on the back of only 20,000 contracts the last 2 nights.  We will be
lower on the opening, but we will probably not know the extent of the break
until we start to see the orders in the trading pits.

eCBOT Overnight

Contract            Last      Change High      Low

ZCH7                381^6    -8^4      388^2    379^4

ZCK7                388^6    -9^6      396^4    388^4

ZCN7                393^4    -9^0      401^6    393^4

ZCU7                380^0    -6^4      385^0    380^0

Early Opening Calls: 7 to 8 cents lower

Top News

** Tuesday's USDA Grain Inspections - Corn:  34,135,000 bu  (-10.3% vs. last
week, +3.2% vs. last year)

** Tuesday's USDA Grain Inspections - Sorghum 2,289,000 bu

-- Grains faced a lot of pressure overnight - could be some traders believe
Funds will be sellers to start the new year and are trying to get a jump on
them? The volume of trade last night was not huge, 8,519 Corn contracts
traded.

-- Corn sales last week another big number 45.4 mil.bu. This takes year to
date sales to 1.173 bil.bu. That equals 53% of the USDA total projected
sales vs. the five year average for this date of 44 ½ %.

-- USDA reports as of Dec. 27 Corn loans stand at amazing 767 mil.bu. up 76
mil.bu  for the week. The reason I say amazing is the fact that last year on
this date we had 504 mil.bu. under loan. Now we have 263 mil.more under loan
while Corn prices are trading $1.80 higher than a year ago and Corn
production was 347 mil.bu less???

-- The World experienced the sixth warmest year in history in 2006.  China
had it’s hottest year since 1951.

-- Don’t forget this week the CFTC will start the new Supplemental report
that will show positions for the Index Funds.

-- The Commitment of Traders report with Options as of December 26 shows
Funds:  Corn Long 297,398 up 3,165

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

-- Outside markets:  metals higher, energies lower, dollar stronger against
major currencies

Cash Markets:

Cash markets did not see a lot of activity last Friday.

CIF Corn weak, hard to find bids.  Jan. +?? to +25, LH Jan. +?? to +33, Feb.
+35 to +40, March +42 to +44, Apr. +40 to +43. May +40 to +43

PNW Corn trains steady off 2  Jan. +62  Feb.  +68

NS Corn  Jan. 15  Feb.  -4   Mar. +2  Apr/Jul +5   Evansville  CSX  -10

Transportation:  Barge freight steady  STL 205 - 215     IL. River  270  285
Ohio  185  200

            BN rail freight firmer    Jan. +50     Feb. 150   Mar. 200



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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