Linn Group Morning Corn Comment

CHICAGO - Feb 14/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market rallied on the back of nothing yesterday as the March
contract closed over 6 cents higher above the recent high of $4.09 ¾.
Everybody seemed to have a different reason for the rally yesterday.  Some
trader pointed to the technicals, some pointed to the rebound in the crude
oil market, some said it was fund buying in front of the 10 year baseline
projections released today, but really, it was probably because nobody
really wants to sell the market.  Many traders are nervous about standing in
front of the funds and many other feel the market is going to rally and they
don’t want to miss that rally.  Beans continue to rally against negative
fundamentals, such as large stocks, So. American production coming into the
world markets, etc, and corn is following that market higher.  Funds were
net buyers of 5,000 contracts yesterday and open interest was up another
10,000+ contracts, so we did have new buying yesterday.  Exports were quiet
overnight, but traders will be keeping their eye on the weekly sales
tomorrow morning.  Bull spread activity was very strong yesterday moving
back up to the mid-January levels.

eCBOT market was higher overnight on decent volume with the March contract
closing another 2 ½ higher.  No new news out this morning, but that
shouldn’t be a surprise as for this time of the year.  Many people in the
Midwest digging out from the snow storm/blizzard that seems to affecting a
lot of people.  The corn market looks to be opening higher this morning, but
the real question will be whether or not it can hold these highs as the day
goes on.  The market seemed to rally on technicals yesterday and many
traders just unwilling to sell the market.  Outside markets are mixed this
morning with metals higher, but crude oil is slightly lower.  The bull
spreads, N/Z, was higher yesterday, up to the Jan levels, and some traders
are speculating this is an indication flat price corn will try and make a
run at the highs from January.  The market will probably chop around as
trader await the release of the baseline S&D’s to be released at 11:00 am
CST.  Keep an eye on the market until the baseline numbers are released, and
then we will look toward the funds for direction.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                413^4    2^4                   414^0    412^0

ZCK7                425^2    2^0                   425^6    423^6

ZCN7                432^6    2^2                   433^0    431^2

ZCU7                415^6    1^4                   416^2    413^0

Early Opening Calls:

Top News

-- Corn Processing Industry in Korea issued tender to buy 55,000 mt of corn,
acc. traders.

-- Chinese Corn futures were mixed. Cash Corn prices in China have fallen
over the last two weeks as demand has slowed.

-- USDA to issue 10-year estimates for US Crop and livestock output
-Wednesday at 12pm ET.

-- USDA claims 20% of the 2006 corn crop- or 2.15 bln bushels - will be
utilized for ethanol; projects 3-bln bu for 07/08.

-- Analysts forecast 9.8% jump in corn plantings this yr. to 86 mln + acres
vs. 78.3 mln in 2006-despite increased acreage could see record prices.

-- Corn spreads: Fimat 2,000 CK/CH,Tenco 600 CZ/CK, Caly 500 CN/CK, GH 300
CH/CK

-- Funds moved back to the buy side Tuesday buying 5,000 Corn.

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

-- Volume was 249.4 with open interest up 10.1 to 1499.5

-- Outside markets:  energies lower, metals higher, dollar lower against
most currencies

Cash Markets

-- CIF Corn: Feb. +43 to +47, Mar. +41 to +43, Apr. +35 to +38, May +37 to
+39, June +35 to +38 July +35 to +38, Aug. +41 to +45

TREND:

Ready to hedge new crop soft wheat 4.95 in July. Time to think about
returning to the bear spreads in Dec/July if we can get them done at 15. The
wheat/corn spread in the July contract is into new lows, which could move
that trade down 20 to 25 cents quickly.

Corn has better closes than I thought we might. Weather becomes very
important here but only later in the year. This rally is based more on
concern that the weather will be wet in the spring and prevent planting
progress, eventually turning to less positive summer growing weather as
well.

Beans and meal deserve your attention. Meal closed into new highs and should
now take aim at 235.00. Beans got the close over 7.50. Oil should set sights
on 32 cents if not higher.



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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