Linn Group Morning Corn Comment

CHICAGO - Jan 19/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market on Thursday closed mostly higher, but well off the highs as
we saw pressure from crude oil prices declining further.  The sell off in
crude oil futures has been helping keep a lid on any rally's in the corn
market.  The market has had a wild week and traders have said the market is
due to settle down.  Nothing has changed in the corn market, the demand by
exporters and ethanol producers is still the driving force behind corn
futures and the influx of new money into commodity funds is driving the
funds to buy more corn.  The anticipation of the reduction in corn stocks is
making the market a tough sell for even the bears.  The bears point to the
recent decline in crude oil prices as a reason the demand for ethanol will
also decline, thus lower corn prices.  Funds were net buyers of 2,000
contracts in corn yesterday after being sellers at 12:30 pm and traders said
there was a lot of active spreading going on in July/Dec.  The press keeps
touting the State of the Union address next week when it is rumored
President Bush will tout the need to greatly increase the need for bio-fuel.
This could just add gasoline to the fire in pushing corn prices higher.  Big
fund activity as one big customer unwound some losing positions.  The
weather in the US and So. America remains bearish the corn market as winter
precipitation in the US is excellent, renewing the call for a good start to
corn planting and So. America continues to receive good crop growing
weather.  Open interest was up again another 13,000 contracts and up over
60,000 in the last 4 trading days, pointing to new money coming into the
corn market.

eCBOT market was lower overnight, with the March closing 3 cents lower on
decent volume.  Export sales were released this morning and came in above
the estimate of 800,000 to 1.0 mil at 1.425 mil.  This is once again a very
strong number, surprising some traders, and it will help support the corn
market.  These latest export sales numbers show just how hard it is to sell
the corn market and to show the demand for US corn is stronger than ever and
only going to stay strong.  Traders are hesitant to sell the corn market
because of the bullish fundamentals and we may see prices go higher just
from a lack of selling.  The downside is limited right now, give little
reason to sell the market and the possibility of fund buying is too strong.
The corn market should open lower off of the overnight closes, but look for
traders to buy weakness and if the market does hold, look for it to go
higher.  The export sales will help support a lower opening and maybe even
push the market to open unchanged.  On the other side of the coin, there
will be some traders wanting to take profit today and sell out of long
positions into the weekend.  I feel the market needs to hold up higher as
the day goes on or it could be in trouble by the end of the day as the
market could gain selling momentum on profit taking.  The funds are once
again the wild card as they could be in to buy the market today as they have
the last 3 days and with nobody willing to step out and sell the market, we
could try and make new highs.  The corn market is very volatile, be aware of
your positions at all times.  Informa will be releasing their crop acreage
estimate at 10:30 this morning, so that could have a positive or negative
affect on today's trade.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                409^0    -3^2      413^0    406^2

ZCK7                418^2    -3^6      422^6    416^2

ZCN7                424^0    -4^0      429^0    422^2

ZCU7                396^0    -10^0     405^4    395^0

Early Opening Calls:  2 to 3c lower

Top News

**USDA Corn 06/07 Export Sales Net: 1.425 mln mt; expected 800,000 -
1,000,000

-- USDA reports private sale of 06/07 Corn to Egypt: 120,000 mt to be sold

-- Export News: Israel tendering for 50,000 mt. Corn.

-- Informa acreage report anticipated at 10:30 this morning, could change
trade for the better or the worse

-- The Mexican economy ministry announced it had opened tariff free quota's
for 2.85 mmt. of yellow Corn and had extended it's quota for 750,000 mt. of
White Corn imports.  The quotas are to be filled by April 30.

-- ISTAT:  Italy's 2006 corn production cut -0.5% from Dec est. to 10.127
mil tons, soft wheat unch to 3.09 mil tons, durum unch to 4.087 mil tons

-- Iraq's unwillingness to buy wheat from the AWB, following the Saddam
kickback scandal could be US's gain

-- Corn Thursday showed open interest up 13,084. Soybean open interest up
8,066  Wheat  up 3,048.

-- Corn spreads: GH 2,000 CZ/CN, UBS 1,000 CH/CZ, Tenco 1,000 CH/CN, Fimat
500 CZ/CN

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

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

-- Outside market has metals higher, energies mixed, dollar mixed against
major currencies

-- Volume was 302.5 with open interest up 13.1 to 1463.9

Cash Markets

-- CIF Corn:  LH Jan. +33 to +35,Feb. +36 to +41, Mar. +42 to +45, Apr. +37
to +40, May +37 to +40, June +37 to +40

TREND:

Front month corn gained 2 to 3 cents today on July and Dec with solid scale
down buying in the March and what looked to be an influx of the small trader
trying to bull spread corn. Look for March corn to be pretty well supported
down to the 4.00 area. Pick a spot and be counted again. We continue to feel
we may eventually get through the highs and 5.00 to 5.50 would be the
results. We may continue to see the choppy trade, and lately, a ten cent
range in corn has been the norm for being choppy.



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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