Linn Group Morning Corn Comment

CHICAGO - Feb 13/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off yesterday after the rally on Friday and crude oil
setting back over $2.  The corn/ethanol and soybean/soyoil markets are more
vulnerable to volatile swings because those markets are trading more and
more with the energy markets.  There is really no news out in the corn
market as we settle into the February doldrums and the market just chops
around.  The brisk demand will make it hard to break the corn market very
far, but it will also be hard to rally the corn market because of the lack
of news and the already huge long position.  The prospect of a huge jump in
corn acres, with some traders talking 12-15 million acres, is holding back
any rally, but as we have discussed earlier, traders are widely divergent on
their expectations of corn acres and nobody will really know until we get
closer to spring planting.  Funds sold app. 2,000 contracts, but open
interest was up 6,000.  Goldman roll ends today and spread activity remains
very active.  Buenos Grain Exchange released their estimate at 22 mmt from
21.5 mmt last week.  This number out of Argentina seems to increase almost
every week.

eCBOT market was a little higher overnight on decent to light volume with
the March closing 1 higher.  Lack of news and many traders taking time off
has caused this market to just chop around.  Interestingly, talking to
traders this morning, they said they wished they had taken the month off
instead of trading because the market aren't doing anything and they are
getting chopped up.  News out of Argentina of an increase in corn production
will be negative the corn market short term, but the fundamentals haven't
changed and the markets needs more acres this year in the US.  Weather is on
the radar, but still very early to talk about it, no pun intended.  The corn
market is acting more and more like an energy market because of ethanol and
for that reason, when we don't have any new news, the market will follow the
energy markets.  Look for the market to open higher today, but have trouble
rallying unless we get help from the funds and outside markets.  Some talk
of new index fund buying, but nothing confirmed yet.

eCBOT Overnight

Contract            Last      Change High      Low

ZCH7                406^0    1^2       406^2    403^2

ZCK7                417^6    1^6       418^0    415^0

ZCN7                424^6    1^4       424^6    422^0

ZCU7                409^6    1^2       409^6    408^0

Early Opening Calls:  1 to 2 cents higher.

Top News:

-- In it's weekly report the Buenos Grain Exchange says the Argentine Corn
crop could reach a record 22 mmt.  This compares with their previous
estimate of  21.5 mmt. The exchange estimated Soybean production at a record
44.3 mmt.

-- Fund trade slowed from Friday's pace and was mostly on the sell side.
Monday Funds sold 2,000 Corn, 2,500 Soybeans, 2,000 Wheat, 3,000 Oil.
Bought 1,400 Meal.

-- Irrigation, increase in areas seeded to sugarcane, could lead Brazil to
export 53 billion gallons of ethanol in ~20 years, acc. to trade sources

-- Dry weather in So. Africa and short covering help push Mar. White Maize
limit up, 3.05% acc. traders.

-- Asian holiday, comparatively high prices, likely to put a damper on Asian
grain demand this week. acc. to analysts

-- The USDA will release new 10 year agricultural projections Wednesday.
These projections are developed by interagency committees and are not actual
surveys.

-- Port congestion in Australia, strong grain harvest in Argentina and
Brazil boost spot freight rates for Asian route - up 3% from last week to
$36k - $37/day.

-- Corn spreads: Fortis 5,000 CK/CH, Fimat 5,000 CK/CH, 1,000 CN/CH, Man
1,000 CH/CK

-- Outside Markets:  Gold up  $3.00, Crude Oil steady @ $57.80, Dollar
trading lower

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

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

Cash Markets:

Cash markets were steady to weaker .

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

River house bids lower STL. off 3 at +6, Morris IL. River steady at -14,
Havana off  5 at -14.

PNW Corn trains steady:  Feb.  +70   Mar.  +75   Apr. +66

NS Corn   Feb. -2  Mar. +1    AMJJ  +1    Oct. -15   Evansville  CSX  -8

TREND:

Ready to hedge new crop soft wheat 4.95 in Jly. Time to think about
returning to the bear spreads in Z/N if we can get them done at 15.
Wheat/corn in Jly into new lows which could move that trade down 20 to 25
cents quickly

Do not see corn able to extend gains at this time but take care because
spring could be an entirely different story. Weakness will continue to find
support from user and spec buying alike. Weather becomes very important here



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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