Linn Group Morning Corn Comment

CHICAGO - Mar 1/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market bounced back nicely yesterday after the big sell off on
Tuesday tied to the meltdown in the Chinese stock markets.  This bounce back
wasn’t completely unexpected as the fundamentals in corn haven’t changed and
end users are going to be buying on breaks.  We feel that the end users are
not covered for their needs and will need to buy breaks.  This was never
more evident when So. Korea announced that it was buying 380,000+ tones of
corn on Tuesday night.  The corn market broke on Tuesday on outside news
that really had nothing to do with the grain markets, but it seemed every
commodity and stock sold off on Tuesday.  Volume was back to normal, very
strong, but nowhere near the levels seen on Tuesday.  Weather concerns
remain real and as we get closer to actually planting corn in the Midwest,
it will move more and more to the forefront.  The risk of getting corn
planted will go from talking about it to reality very quickly in coming
weeks and months.  Funds were back buying the corn market yesterday, 6,000
contracts, and it seemed to gain momentum when the market got above the high
on Tuesday.

eCBOT market gave back some of the gains on Wednesday with the May contract
closing 4 lower on huge volume, just look at the price ranges.  Export sales
released this morning at 318,000 contracts was below the estimate of 600,000
– 800,000.  This was not unexpected.  USDA forum in Washington starts today
and we have a representative at the conference, so we have more details
tomorrow.  USDA released a corn outlook of 87 mil acres, an increase of 8.7
for a production of 12.2 bil bu.  Traders consider this number to be a
little negative as many expected the USDA to come in at or below and
increase of 8 mil acres.  Even though the trade is estimating a 10 mil acre
increase, the USDA would never release intentions close to that number.
Remember, these are only intentions and will change rapidly, especially when
we get closer to actually planting corn.  The market should give back some
of yesterday’s gains today and be very choppy.  Outside markets are lower,
especially stocks, so we will see if that has any effect.  I think the best
advice in the corn market is don’t chase the extremes, don’t buy higher
markets and don’t sell lower markets.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                420^6    -4^4                  428^4    420^4

ZCK7                431^2    -4^2                  439^6    430^6

ZCN7                440^0    -4^2                  448^4    439^2

ZCU7                426^4    -5^0                  435^0    426^2

Early Opening Calls: 3 to 5c lower

Top News

**USDA Corn 06/07 Export Sales Net: 318,000 mt; expected 600-800,000

-- Ag outlook forum, economist Collins forecasts an extra 8.7mln in corn
acreage to 87.8 acres, production seen at 12.2 bln bu. w/declining stocks.
American farmers will plant 70.5 mil SOYBEAN acres in 2007, -0.7% lower than
previous estimates

-- USDA: American farmers will harvest 12.2 bil bushels of corn in '07 on 87
mil acres - up +1.1% from previous estimates

-- USDA:  American farmers will plant 70.5 mil acres in 2007, -0.7% lower

-- Funds turned back to the buys side Wednesday buying: 3,500 Soybeans,
1,000 Oil. Sold 700 Meal.

-- When Pres. Bush visits Brazil next week the Brazil government is set to
ask him to cut import tariffs on Ethanol.

-- Corn spreads: JPM 1,000 CH/CK, FCS 1,200 CH/CK, Fimat 500 CH/CK

-- Deliveries:  Corn  89 thru 12/14/06 no stopper

-- Volume was 256.4 with open interest down 7.6 to 1478.1

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

-- Outside markets:  metals higher, energies mixed, dollar mixed, stock
market lower

Cash Markets

--CIF Corn:  Mar. +42 to +43, Apr. +29 to +33, May +33 to +36, June +30 to
+34, July +30 to +34, Aug. +36 to +39

TREND:

The corn market rebounded into our gap with a close over $4.39 negating any
major break beyond this $4.20 level on May. We still should see some
liquidation in the $4.40 to $4.45 range. For the moment the February highs
should offer resistance as we adjust to this new price level for the corn
market. Look for support from $4.25 to $4.20. This looks to be our s/t
range. We need a close over $4.50 to escalate the bull swing which should be
difficult to deal with at that point. December corn should also run into
some problems at $4.25. A close over $4.29 ½ is the key to another leg
there. But we should have confirmed our support under $4.10. Expect buying
there.



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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