Linn Group Morning Corn Comment

CHICAGO - Mar 2/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The funds led the corn market lower yesterday after the received
disappointing export sales.  The May contract closed 7 ½ lower, but that was
almost 11 cents off the lows made earlier in the day.  Funds were very
active, selling app. 20,000 contracts by the end of the day with as much as
15,000 of that coming in the first hour of the day.  Exports sales were
probably the straw that broke the camel’s back according to traders as the
market was called 3-5 lower and then went lower from there to the point
where the market opened 8 lower.  The outside markets and China were being
blamed for staring the grain markets lower, but at the end of the day, the
funds control the grain complex.  Numbers coming out of the USDA forum are
fast and furious but very little surprises.  Export sales were
disappointing, but not unexpected and are still strong for the year.
Traders said that even with the big funds sales, the market still saw good
commercial buying as probably evidenced by the corn market closing 11 cents
off the lows.

eCBOT market continued selling off last night as we saw the May contract
close another 7 ½ lower.  Volume last night was pretty good, but not as big
as we have seen the last couple of nights.  The general consensus has been
that the corn market is seeing funds reduce their positions in front of the
USDA report to be released at the end of the month.  It may seem a little
early in the month, but I expect this month to be very volatile and with the
approaching planting season, weather will be scrutinized by everybody and
their brother and everybody will try and interpret the forecast to conform
to their position.  With nothing in the ground yet, every piece of news is
up for interpretation and that makes for volatile markets.  We should see
the market open lower today on the opening and then we will wait to see
where the funds take us.  Commercials have been in buying the corn on
breaks, but the funds are just too big and are able to push the market.
Technicians will point to today’s close as very important as we approach key
pivot points.  We should see continued fund selling on the opening today and
this does offer opportunity for users to price corn and the opportunity for
bulls to buy calls.  We are recommending traders buy options at this point
because of volatility, or if you are going to trade futures, protect your
position with an option.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                410^6    -6^4                  417^2    409^0

ZCK7                420^4    -7^4                  428^6    419^6

ZCN7                429^4    -6^6                  437^4    429^0

ZCU7                418^2    -5^6                  422^6    416^4

Early Opening Calls:  7-10 cents lower

Top News

-- Export News: South Korea bought 275,000 mt. US Corn for July/Aug.--
Deliveries:  Corn thru 2/7/07 no stopper

-- Philippine gov't has agreed "in principle" to allow duty-free imports of
400,000 MT of corn, presidential approval is needed.

-- Corn spreads: Tenco 600 CH/CK, Fortis 600 CK/CN, ABN 400 CZ/CN, Fimat 300
CH/CK

-- Some snow will continue in northern areas of the Corn Belt Friday.-- Some
snow showers move across the Belt late Saturday into Sunday, dry Monday &
Tuesday.

-- The China State Administration of Foreign Exchange has lowered local
financial institutions foreign debt borrowing quota for this year.

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

-- Volume was 313.9, with open interest down 17.2 to 1460.8

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

Cash Markets

-- CIF Corn:  Mar. +31 to +33, LH Mar. +32 to +33, Apr. +30 to +33, May +34
to +38, June +30 to +34, July +30 to +34, Aug. +36 to +39

TREND:

The corn market has bounced off its $4.10 to $4.20 range support as we try
to stabilize this current correction of the recent upswing. However, the
rally should run into trouble against the $4.35 to $4.40 range on May. Have
to lighten upon longs there but look at scale down buying in CZ as we
develop the $4.00 level as support. This leaves the $4.07 to $4.00 area as
the buy range . Have to risk a close under the Feb. lows under $3.90.
Otherwise step over to the ck options now that we’ve undergone some near
term liquidation. Look at the ck 450 calls- closed at 15 ¼ or buy the ck and
buy puts. For now, expect a $4.15 to $4.35 range.



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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