Linn Group Morning Soybean Comment

CHICAGO - Jan 9/07 - SNS -- Following is the morning soybean futures comment from the futures commission brokerage firm Linn Group.

Soybeans opened six cents lower and struggled throughout Mondays session
ending down 4 ¼ cents in March. The selling continued overnight with March
soybeans ending the night session down 7 ¼ cents to 670.Traders say there
was feeling of hesitancy on the trading floor with talk of commodity index
funds reallocating their 2007 portfolios to include less agricultural
products. This on the heels of a substantial hedge fund liquidation has
traders nervous.  Traders note that March soybeans have not been this low
since December 22nd. Floor sources note that the volume was light Monday and
not much action. Funds ended the day net sellers of 1,000 soybeans, 300 meal
and 2,500 oil.

Fundamentals continue to weigh on the soybean complex. Brazil continues to
get good rains and Argentina while mostly dry over the weekend is expected
to get rain Wednesday and Thursday. A weaker Asian market has bearish
implications especially with a 3% drop Monday night in Malaysian Palm oil
futures. Brazil grain analyst Celeres issued a new estimate for Soybean
production at 56 mmt. up from their previous estimate fo 54.5 mmt. The
weekly commitment of traders report released yesterday after the close shows
funds long 59,579 Up 12,978, Meal long 12,311 up 471 and Oil long 47,657.
The CFTC COT report included a new supplemental report that breaks out the
index fund positions. The report shows index fund longs at 132,509. This
information is becoming increasingly valuable to traders as the growing
presence of index funds in the markets is changing the market dynamics.
Overnight Chinese Soybean, Meal and Oil futures closed lower. Malaysian Palm
oil futures closed lower.

Opening call 5 to 8 lower.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZSF7                657^0    -8^0                  663^0    657^0

ZSH7                670^0    -7^2                  675^0    669^2

ZSK7                684^0    -7^0                  689^0    683^2

ZSN7                697^2    -6^2                  701^0    695^4

ZSQ7                706^0    -3^4                  706^0    706^0

ZMF7                188.4    -2.2                   190.6    188.4

ZMH7                193.0    -2.1                   195.0    192.9

ZMK7                197.1    -1.4                   198.0    196.8

ZLF7                 27.90    -0.22                 27.97    27.90

ZLH7                 28.29    -0.20                 28.48    28.28

ZLK7                 28.75    -0.21                 28.91    28.75

Early Opening Calls: 4 to 6c lower

Top News

-- An American Farm Bureau economist released estimates for the 2007/08 and
2008/09 Corn crops.  American Farm Bureau sees 2007 harvested acres at 79.2
million acres (86.5 planted), 2008 acres at 83.0 mil acres (91.0 planted)
For 2007/08 they forecast production at 12.1 bil.bu. and ending stocks at
699 mil.bu.  Meanwhile 2008/09 production seen at 12.9, ending stocks 637.

-- Analyst IBGE downgrades Brazil's soybean crop -0.5% to 54.9 mil tons,
mostly on a slightly lower estimated acreage

-- The Commitment of Traders report with Options as of January 3rd shows
Funds:

Soybeans          Long  59,579  up  12,978

Meal                 Long  12,311  up  471

Oil                    Long  47,657  up  67

-- Funds all on the sell side Monday as re-allocation talk continued. Funds
sold 1,000 Soybeans, 300 Meal, 2,500 Oil.

-- New 18-month highs in Asian freight rates - analyst cite increased
bookings ahead of Brazil's grain season.

-- Canada challenges US farm subsidies in WTO court, insisting the billions
payed to US farmers cause harm to other producers around the globe

-- Indonesian, Taiwanese, and Chinese firms reach near record $5.5 billion
biofuel compact to build new facilities in Indonesia

-- Malaysian palm oil futures posted minimal gains after a sell-off
following early gains - most traders awaiting big production report released
Wednesday

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

-- Crude Oil trading lower  $55.07  off  $1.01

-- The Dollar is trading lower vs. the Euro , steady vs. the Yen.

Cash Markets

-- CIF Soybeans:  Jan. +32 to +38, LH Jan. +37 to +39, Feb. +40 to +43, Mar.
+42 to +47, Apr. +35 to +39, May. +35 to +40

-- Processors: Decatur  -15   Danville –20   Bloomington –10  Gibson City
-20

-- Board Crush Margins:  Jan.  63.64  off  .96      Mar.  65.36  off  .92



To discuss this report further or for specific trade ideas please contact me
directly

Nathan T. Smith III
Linn Group
nsmith@linngroup.com
toll free: (877) 787-6278
local: (312) 896-2090
fax: (312) 896-2050
www.linngroup.com/

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