Linn Group Morning Corn Comment

CHICAGO - Feb 12/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market rallied on Friday in front of the weekend as we saw the
market find buy stops and funds were in buying the market.  The March
contract closed 6 ½ higher as traders estimated funds bot 4,000 – 5,000
contracts by the end of the trading session.  Nothing has changed in the
corn market as it remains very volatile and two market forces are fighting
against each other.  On one side we have the incredible demand for corn from
ethanol producers and exporters and on the other hand we have the expected
huge increase in corn acres this spring.  The $4.00 area remains the magical
number as we saw not only commercial buying, but speculative buying on
Friday.  After getting through the USDA report, basically a non-event, the
market turned to weather forecasts and talk of El Nino transitioning to La
Nina.  It is WAY to early be guessing weather and forecasts for spring and
summer, but because the stocks are so tight, there is no room for error and
no room to have a delayed planting season.  Commitment of Traders report
released on Friday after the close showed a reduction in corn longs, but
with Friday’s open interest increasing almost 13,000 on Friday, we are
probably back to the levels from the previous week.

eCBOT market was a little stronger overnight on the back of the rally on
Friday with the March closing almost 3 higher on light volume.  Tough to
find any support for the rally overnight as outside market were lower.
Crude oil is down over $1 this morning and because of ethanol, corn has been
following crude oil.  Continued talk about weather will keep everybody
interested, but it is really to early to make decisions on weather
forecasts.  It could be a very interesting day today as the market should
open higher and we need to see if the market can hold a higher opening.  The
corn market has found support on attempts to sell the March contract below
$4.00, but we haven’t found anybody that wants to buy on strength recently.
That is what we need to reach the next level is for the market to buy on
strength and push the corn market up to the next level.  The big question
that traders will start to try and solidify will be the number of corn acres
planted.  Traders think the market is trading a 10 million acre increase,
but some want to talk about 12-15 million.  This will probably be one of the
most fiercely debated points this spring with some traders feeling we are
losing some of the acres because of tight fertilizer and seed needs.  These
points will be debated all spring and will cause even more volatility in the
corn market.  Look for the corn market to open unchanged to 1-2 higher.  I
think the market will find sellers 3-4 higher, but be careful of the funds
as they can make the best traders look stupid if you get on the wrong side
of the funds.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                408^0    1^6                   409^4    406^0

ZCK7                419^4    1^4                   421^0    417^0

ZCN7                426^0    1^6                   427^4    423^6

ZCU7                412^0    2^2                   413^4    409^2

Early Opening Calls:  1-2 higher

Top News

-- Analysts note bullish bias for grain markets today after Friday's
technical higher close, tightening stocks of cash grain and today's seasonal
buy date for corn and beans.

-- USDA Sec. Johanns will go before congressional committees this week.
Expected to be grilled about the departments proposed farm bill & budget
requests.

-- Grain markets to shift focus to weather w/crop report behind - analysts
note that weakening El Nino generally results in below trend line yields for
corn and beans.

-- Chinese Customs:  Jan '07 corn exports shot up over +100% from Jan '06 to
940,000 tons

-- Kazakhstan likely to export another 3.5 mil tons of grain, on top of the
4 mil tons they've already sold, acc. to Ag Ministry sources

-- OPEC officials to hold off on additional output cuts ahead of Mar. 15
meeting - market reaching a balance.

-- Corn futures open interest grew by 12,667 contracts to 1.484 mln
contracts.  Electronic volume was 180,267.  Pit volume was pegged at
116,755.

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

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

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Spot                             +48/

Feb       +30/35 H           +46/49 H           +13/18 H           +70/75 H
375

Mch      +30/34 H           +45/47 H           +19/23 H           +74/80 H
330

Apr       +19/22 K           +35/38 K           +8/ H                +70/75
K           320

May      +21/25 K           +36/39 K
+70/78 K           310

Truck                Beans     Corn   Wheat              Meal Hi-pro
Oil

Chicago                       -29 H    -19 H   -43 H

Toledo              -30 H    -18 H   -45 H

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

TREND:

Corn came back to life on report of new index fund allocations and fear of
weather later this year. Still a lot of talk about increased cost of
planting corn and just lack of available nitrogen and seed. Could be a
limiting factor at some point in the future? Do not see corn able to extend
gains at this time but take care because spring could be an entirely
different story



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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