Linn Group Morning Corn Comment

CHICAGO - Feb 9/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market surged ahead on Thursday in front of the USDA report on
renewed demand interest in corn and crude oil up almost $2.  Export sales
released before the opening showed that demand has not gone away and may
actually have gotten stronger as the market was not expecting the higher
sales number.  After making new lows on Monday, the market seemed to find a
fresh round of buying yesterday on the export sales and technical short
covering.  As one trader said, nobody wanted to be short going into a USDA
report.  Much of the volume yesterday was more spreads and position squaring
into the USDA report.  Many traders felt that at these higher prices we
would see some rationing in corn, but the export sales yesterday proved that
we aren't there yet.  Funds bot app. 5,000 by the end of the day, probably
mostly short covering as we saw open interest decline.  Weather remains a
non-factor, but some long range forecasters are starting to talk about the
possibility of a hot/dry summer.  We released a special corn wire yesterday
that talked about the effect of the change from el Nino to la Nina and its
effect on corn yields in past years.  Very informative.

eCBOT market was stronger overnight in anticipation of the USDA report this
morning.  The actual numbers for the report are listed below, but the
consensus seems to be a neutral/bearish report as expected.  Some traders
wanted to talk about a bullish report because of market action yesterday,
but in reality, the report is a usually a minor report.  With today's corn
demand market, any report will be scrutinized.  Some traders want to talk
about a long term weather forecast that was released calling for a cold/wet
spring, into a hot/dry summer.  Now, this is a long range forecast, but
there is so little room for error in corn acres and yield so traders will be
looking at everything and the market will react in weird ways.  Look for the
corn market to open steady, maybe 1-2 higher off the close yesterday and
then we will see where the funds want to take the market.  The funds are
still the big player here in corn even with the already huge long position
and many traders are looking at the long range forecast for a hot/dry
summer.  It will be a very interesting day today as we are below the 20 day
moving average in the March and close to a higher weekly close.  Corn should
not make a big run without further positive news and nothing is on the
horizon.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                403^2    3^4                   403^4    400^0

ZCK7                414^6    3^0                   415^0    411^4

ZCN7                420^4    2^6                   421^4    417^4

ZCU7                407^4    2^0                   407^4    405^0

Early Opening Calls: higher 2 to 4c

Top News

**USDA Report**

**US Feb Corn 06/07 Carryout: 0.752 bln bu. ; est. 0.76; Jan Rpt 0.752

**World 06/07 Corn Carryout:  87.95  mmt; Jan Rpt 86.44

**Feb Argentina 06/07 Corn Output:  21.0 mmt; Jan Rpt 19.0

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

**Feb S Africa 06/07 Corn Output:  9.50 mmt; Jan Rpt 10.0

-- Mexico's economic bureau says 2007 tax free corn import quota raised
550,000 mt to 1.3 mln mt.

-- Exporters noted Israeli group buys 36,000 T of US corn gluten & DDGs

-- Analyst watching to see how USDA projects ethanol use; estimated at
2,150-mln bushels; expect to see 762 mln bus on ending stocks.

-- Chinese corn futures settled 5 Yuan higher overnight

-- South Korea and the US fail to come to an agreement on beef shipments, no
date set as of yet to resume the discussions

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

-- Volume was 273.8 with open interest down 3.67 to 1473.7

-- Outside markets:  energies and metals higher, dollar stronger against
most currencies.

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Spot                             +47/

Feb       +34/36 H           +45/47 H           +13/18 H           +70/75 H
375

Mch      +31/35 H           +45/47 H           +19/23 H           +74/80 H
330

Apr       +20/22 K           +35/38 K           +8/ H                +70/75
K           320

May      +22/25 K           +36/39 K
+70/78 K           310

Truck                Beans   Corn                 Wheat   Meal Hi-pro
Oil

Chicago                       -29 H    -17 H              -43 H

Toledo              -30 H    -20 H              -45 H

Dec ILL            -18 H    - 2 H                           -15 H
-225 H

TREND:

Came out of short wheat new crop hedges today---will try to put them back
out on a test of 4.90 to 4.95.

Corn came back to life on report of new index fund allocations. Watch to see
if this continues in the AM.

Beans also got some addition fund buying but the surprise was that index
funds were showing interest in meal for the first time



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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