Linn Group Morning Corn Comment

CHICAGO - Feb 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market set back unchanged yesterday on light trading as the market
seems to be settling back into the winter doldrums on lack of fresh news.
The corn market is still very top heavy with the record long positions and
very little reason for the corn market to go higher.  The lack of volume
seems to go right along with the lack of new news and the market seems to be
just settling into a trading range.  Some of the pressure in corn is coming
from the Pro Farmer report released on Friday, but I can't stress enough
that there is no way to verify what they reported and these numbers will
change as we get closer to planting season.  Some traders want to talk about
the high cost of fertilizer and the availability of seeds will prevent some
corn acres from happening, but like I said, that could all change in a
month.  Some reports out of US gov't has them releasing 27 mil acres of CRP
land to be used for switchgrass and other cellulosic feed stocks for
ethanol, but the technology isn't there to make this entirely possible.
This isn't big news, since it has been talked about since the State of the
Union address, but the release of these acres was talked about for corn,
beans, and wheat, not switchgrass.  Weather remains a non-factor in So.
America where they continue to bump up their production estimates, and it is
too early to start talking about weather in the Midwest except to say it is
receiving excellent moisture.

eCBOT market was a little stronger overnight on decent volume, but a pretty
tight range.  This time of year is usually a slow time as there is
relatively little news out and after the way the market has performed the
last couple of months, the market may be taking a breather and
consolidating.  The USDA will release a Supply/Demand report on Friday
before the opening, but little is expected to come of it.  Some traders
think the USDA may throw the market a curve ball by changing some of the
demand numbers, but it should be muted.  Traders will start to pay more
attention at estimates for corn acres, but making an estimate today is
highly subjective, but with little room for error in corn production this
summer, even the wildest guess will get press.  Look for the corn market
today to just sit around and trade in a pretty tight trading range, unless
the beans drag the market higher on fund buying.  For the first time in a
long time, the funds were quiet yesterday, basically unchanged, and they
should remain pretty quiet.  Beans have developed into the leader of the
grain complex and because of the huge long position in corn, it will be hard
for it to rally.  I know this sounds like a broken record, but the market is
what it is and I feel traders are going to sell this corn market on any
attempt to rally it.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                403^2    1^2                   403^2    400^2

ZCK7                415^0    0^4                   415^0    412^2

ZCN7                422^0    1^0                   422^0    419^2

ZCU7                407^2    1^6                   407^2    404^4

Early Opening Calls: steady

Top News

-- Export News: Israel tendering for 56,000 mt. opt. org. Corn for Apr.

-- 2007 USDA Budget Projections:  Corn:  Production = 12.065 billion bu,
Planted Acres = 86 mil - increase of +7.7 mil acres from '06

-- Bitterly cold weather helping lead crude oil to the verge of $60/barrel.

-- The Argentine Grain Exchange estimates that 99.8 % of the Corn crop is
planted and also said some new crop had already been harvested.

-- Nat'l Cattlemen's Beef Assoc: 51 cent blenders credit + 54 cent/gallon
import duty on ethanol must be eliminated, let the market determine the fate
of ethanol

-- Corn spreads:Fimat 200 CK/CH, 200 CN/CZ, ABN 200 CN/CZ, Fortis 200 CK/CH.

-- Volume was 125.0, with open interest down 1.9 to 1485.7

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

-- Outside markets:  energies and metals much stronger, dollar lower against
most currencies

Cash Markets

-- CIF Corn :  Feb. +37 to +39, LH Feb. +38 to +41 Mar. +40 to +45, Apr. +35
to +37, May +36 to +39, June +35 to +38

TREND:

Corn remains stuck in the range. Looks as if this market can still set back
slightly but needs to get on with it. Firming cash is a long way from
delivery value but could eventually lead to firming spreads a little?
Support in Mch at 3.90 to 3.85 if we do break down out of the recent range.
New crop Dec remains in the daily range set the day of the Jan crop report.
It should be unable to extend gains so look for this market to test the 3.75
level once we can get below the range.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.