Linn Group Morning Corn Comment

CHICAGO - Feb 7/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market seemed to perform as it has the last couple of weeks with
the market attempting to rally, but finding sell orders higher and closing
lower.  Corn followed wheat lower and fund selling.  Funds sold
approximately 5,000 corn by the end of the day yesterday.  The record long
fund positions will help prevent the market from going higher without new
news and we will find selling on any weakness as fund managers lighten some
of their positions.  Traders said the corn market appears to in a range
around the $4.00 level, looking for direction, but having trouble finding
that direction.  The aggressive selling of corn will probably not happen
because the market is very aware that there will be a shortage of corn in
coming days and the number of acres planted this spring will be very
important and almost a must to keep a lid on already high prices.  Weather
remains a non-factor, possibly even a little bearish as the weather remains
excellent in So. America and the Midwest continues to receive good moisture.

eCBOT market was a little higher overnight on probable technical buying
after the March contract closed below the magical $4.00 level and right next
to the gap from January 12th crop report.  Volume was very light overnight
and that will probably be happening over the next 30 days as the market
settles into a range, until we get closer to planting and planting
intentions.  I would expect the corn market to come under some pressure as
So. American corn starts to come on the world market over the next weeks.
Traders starting to talk a little negative about the corn market this
morning with more traders talking about selling any early strength in the
corn market.  USDA releases a supply/demand report Friday morning and even
though this is a minor report, the lack of news will cause the market to
look at it with interest.  Some traders are thinking this report could be a
little bearish corn by increasing the supply out of Argentina.  Export sales
released tomorrow morning.  Corn should open unchanged, maybe higher this
morning, but look for sellers to pounce on any opening 2-3 higher.  The corn
market is the follower in the grain complex right now.  A weaker corn trade
today is a good way to take positions for the spring and summer.  The lack
of volatility is causing option premiums to get cheaper even without the
underlying futures prices moving.  Look at the break in corn today to
position yourself for trades this summer.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                398^2    1^6                   399^0    396^0

ZCK7                410^0    1^2                   410^4    408^0

ZCN7                417^2    1^6                   417^6    415^0

ZCU7                403^2    1^6                   403^2    401^4

Early Opening Calls: steady, 1 higher

Top News

-- USDA Secretary:  "Early out" for CRP ground is still under consideration,
wouldn't happen until 2008 at earliest

-- District judge rules against GMO's - insists USDA do more tests on GMO's
affects on the environment

-- One analyst expects USDA report on Friday to show first "Negative" sign
for corn; possible extra 5-mln  mt So. American crop.

-- The Goldman roll starts today.

-- Ukraine's Deputy PM announces plan to allow an extra 864,000 tons of
grain to be exported, will discuss whether to eliminate export quotas
altogether

-- Canada's Grain & Oilseed production outlook expected to rise 2.8 mln mt
to 67.2 mln mt on higher yields & larger area planted.

-- Canada's 07-08 corn production is forecast to rise 20% in latest report
by Agriculture & Agri-Food Canada report.

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

-- Fund trade picked up a little from prior day's pace. Funds sold 5,000
Corn

-- Corn spreads: JPM 500 CH/CZ, 200 CH/CN, 400 CH/CU, Rose 500 CN/CK, 300
CN/CZ

-- Volume was 189.4, with open interest up 3.1 to 1488.7

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

-- Outside markets:  energies higher, metals and dollar mixed.

Cash Markets

-- CIF Corn :  Feb. +41 to +45, LH Feb. +41 to +45 Mar. +43 to +45, Apr. +35
to +38, May +36 to +40, June +35 to +38

TREND:

Wheat remains the weak sister here.. When we do get through 4.50 the next
down side move should go to around 4.25. Still favor KC or Mpls longs over
Chi. Wheat also continues to lose to corn

Corn feels ready to come out of the range to the down side. Support in Mch
at 3.90 to 3.85 if we do break down out of the recent range. New crop Dec
could go back to  the 3.75 level

Beans into new highs again today. Weekly chart top at 7.50 could slow the
gains but taking that out should solidify daily chart counts to 8.00 to
8.20. New crop up against 8.00 may have run into some farmer selling today.
Counts there go to around 8.40



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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