Linn Group Morning Corn Comment

CHICAGO - Feb 1/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market yesterday rallied early in the day on fund buying, but
couldn't hold it as the market had locals selling late and there was a 2,000
lot on the eCBOT screen that pushed the market lower.  Yesterday was a
perfect example of the volatility that we are now experiencing in the corn
market.  The fundamentals haven't changed, so there will be people to buy
the market on any sell off, but the lack of new bullish news will make it
difficult for the corn market to extend into new highs, especially with the
already record long fund position.  Crop weather in the US and So. America
remains very conducive to crop development, but some bulls want to talk
about it becoming hotter and dryer in Argentina, thus putting some stress on
the crops, just like what happened in the US last fall.  The corn market is
still finding support from dwindling stocks across the world as Stats Canada
released their ending stocks yesterday showing a decrease from 2005.  Funds
were about even yesterday after the late selling, but we did see a lot of
spreading from March into May, 14,000, and July, 6,000.  Much of this
spreading was done on the eCBOT screen.

eCBOT market was strong overnight as we saw the market recover from the late
sell off.  Volume was pretty good overnight at 17,000 contracts.  We will
continue to see some of the major funds rolling their positions which will
keep some pressure on the March contract, but any sell off should find
buying.  Export sales this morning were once again strong at 797,200, at the
top of the range of 600,000 to 800,000.  This should add some support to the
market this morning and could push the market up toward $4.10 vs. March and
we could find some buy stops up there on spec shorts.  Yesterday's trade was
interesting as we opened lower, rallied up to the highs then sat for 2 hours
in a 1-2 cent range, before selling off.  Today could be the opposite as we
are expected to open higher off of last nights action and it will be
interesting to see if the market can hold a higher opening.  The lack of
bullish news will probably make the market dependent on funds or commercial
buying to keep the market higher by the end of the day.  I still think that
until we get any bullish news or the market breaks out of this trading
range, you want to trade the range, probably with options for safety.  I
don't think the risk reward is there to short corn futures because as a
demand market, it can rally and never look back, especially with many
traders talking about February being a down month historically for the
grains.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                407^6    3^6                   408^4    403^6

ZCK7                419^0    3^2                   420^0    415^4

ZCN7                425^6    3^2                   426^6    421^4

ZCU7                408^6    4^2                   411^4    405^0

Early Opening Calls: 2 to 4 higher

Top News

**USDA Corn 06/07 Export Sales Net: 797,300 mt; expected 600-800,000

-- CBOT electronic corn volume was 132,525; pit volume was 89,561.  Open
interest rose 2,562 contracts

-- The EU commission said the US Farm Bill proposals do not do enough to cut
domestic support payments if there is to be a successful outcome to world
trade talks.

-- Funds were net buyers of 4,000 Corn but by the close were even.

-- Corn spreads: JPM 1,000 CH/CK, 1,000 CK/CH, 500 CZ/CN, Man 1,500 CK/CZ

-- Barge freight on the Illinois River continues to firm as temps stay cold

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

-- Volume was 227.5, with open interest up 2.6 to 1484.7

-- Outside markets:  metals higher, energies lower, dollar mixed against
most major currencies.

Cash Markets

-- CIF Corn :  Feb. +31 to +34, LH Feb. +35 to +39 Mar. +40 to +42, Apr. +35
to +37, May +36 to +39, June +36 to +38

TREND:

Corn remains stuck in a rather contrite range. Dec back to testing last
weeks highs but should not be able to extend the gains.



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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