Linn Group Morning Corn Comment

CHICAGO - Jan 12/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market surged higher on Thursday after funds came into the market
and bot close to 9,000 contracts and the index funds sold 11,000 on the
close.  Traders said the market is experiencing the perfect storm, demand is
increasing everyday from exporters and ethanol producers, and the market is
caught with the wrong position with our recent break.  As we have been
saying, the funds are just too big and they will determine which way the
market will go regardless of everything else.  Some talk this morning that
the commercials are caught and they will be covering their positions.
Ethanol continues to be the driving force of the corn market.

eCBOT market was quiet overnight, as expected in front of the grain report.
The USDA report released this morning was a very bullish report and some
traders this morning want to call corn limit bid and don't think that corn
will trade today.  Across the board, everything, yield, carryout, crop
production was much lower than the estimate and many traders are going to be
caught off guard, especially after the rally we have had the last 2 days.
The actual numbers are below.  Traders want to talk about traders being
caught on the wrong side of the market and that may be the biggest story of
the day.  With the rally the last 2 days, many traders we talked to didn't
take adequate protection into this number because they didn't think corn
could go limit regardless of the report this morning.  Well, we will find
out today.  The calls this morning will be dynamic and we will have to wait
till closer to the opening, but corn will probably be limit bid in March and
a few months back.  Be careful trading today and if you want to sell limit
up, look to options and trade the synthetic because many times you can sell
the synthetic higher than the actual price.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                376^4    0^0                   377^4    374^2

ZCK7                386^2    -1^2                  386^4    383^4

ZCN7                392^0    -2^4                  392^4    389^4

ZCU7                379^0    -3^4                  379^4    377^0

Open Calls - post report: 15-20c higher

==USDA Reports ==

**US Jan Corn 06/07 Crop Prod: 10.535 bln bu.; est. 10.71; Nov Rpt 10.745

**US Jan Corn Yield: 149.1 bpa; est. 150.9 bpa; Nov Rpt 151.2 bpa

**US Jan Corn 06/07 Carryout: .752 bln bu. ; est. 0.90; Dec Rpt 0.935

**US Dec 1 Corn Stocks: 8.93 bln bu.; expected 9.11; Dec 05 = 9.815 bln

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

**Jan S Africa 06/07 Corn Output:  10.0 mmt; Dec Rpt 10.0

**Jan Argentina 06/07 Corn Output: 19.0 mmt; Dec Rpt 19.0

Top News

-- AIG fund selling to re-balance continued yesterday at the close selling
about 10,000 Corn and 4,000 wheat.

-- Farmer selling picked up slightly yesterday, firm barge freight rates
imply there maybe more cash activity than on the surface.

-- Chinese Corn futures closed higher, Soybeans, Meal and Oil lower.

-- Corn spreads: Caly 200 CN/CZ, RJ 200 CN/CZ

-- US $ is trading lower vs. the Euro, higher vs. the Yen.

Cash Markets

-- CIF Corn : Jan. +35 to +38, LH Jan. +35 to +38,Feb. +41 to +44, Mar. +45
to +49, Apr. +40 to +42, May +40 to +42, June +39 to +42

TREND:

Momentum is not what is lacking here.  Corn traded limit down and now limit
up both over the last week---limit down last Wed and now limit up on Wed of
this week? There are gaps below and gaps above.  Now that we have rallied 38
cents off the lows made this week, there is room for a negative response to
the crop report tomorrow.

Trade leaning to a negative bean report and positive corn report.  Most
important part is the winter wheat acres and the quarterly stocks est. I
will watch closely to what the corn stocks implies for DDG feeding. Of
course this will be calculated forward off what the USDA does with exports
and ethanol grind.

See you on the report - wear your track shoes---will most likely need them.



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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