Linn Group Morning Corn Comment

CHICAGO - Mar 5/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market continued the mover lower on Friday on speculative long
liquidation and continued fund selling.  There is a huge long corn fund
position and some traders commented that we are seeing some of the weaker
longs covering and we are seeing some profit taking after the market
breached some key technical levels.  As one trader said, the down market
across the world seemed to wake up the corn bulls that have just been
sitting back, watching corn go higher every week and may have caused them to
reassess their positions.  The USDA outlook forum last week produced some
numbers, but everything was about what was expected so no new news.  The
demand for corn remains very active, but we might be starting to see some
users backing off at these higher prices and will wait to see if the corn
market gets a significant pull back.  Ending stocks are still going to be
extremely tight, so volatility will remain a big market focus and at the end
of the spring, we will need to add a lot of corn acres or watch out.  Funds
sold app. 5,000 corn on Friday, not as aggressive as we saw on Thursday, but
still significant.  The USDA announced on Friday a 3% drop in corn used for
feed as ethanol takes a bigger percentage.

The eCBOT market continued the sell off we started last week.  The record
long fund position continues to liquidate with no new news hitting the
marketplace except for the market closing through technical levels.  The
corn is experiencing the volatility we have been talking about for the last
couple of months.  With no new news, the corn market will go where the funds
want it to go and currently we are seeing fund liquidation.  Open interest
was down significantly last week, but we still have a huge fund long
position.  Traders this morning are looking for the corn market to open
lower based off last nights activity, but technicians seem to think we will
find support lower(see TREND section below).  China announced over the
weekend that they don’t expect to see any imports in 2007 after they saw
record harvest this year.  Many traders had expected China to have to import
corn in 2007.  The lower outside markets will help push the grains lower
this morning as we have metals and energies significantly lower this
morning.

 eCBOT Overnight

Contract            Last      Change High      Low

ZCH7                402^4    -8^4      410^0    402^4

ZCK7                413^2    -7^6      419^6    412^4

ZCN7                421^6    -8^0      429^0    421^4

ZCU7                409^4    -7^6      417^0    409^4

Early Opening Calls: 7 cents lower.

Top News:

-- Allendale released 2007 planting estimates Friday: Corn  90.7 mil. acres
vs. 78.3 mil. last year.

-- China's Premier indicates string of excellent grain harvests could end
due to unusually warm winter, dry conditions

-- China’s head of state Grain Administration told reporters over the
weekend he sees no need for Corn imports in 2007.

-- South Korea's purchase of 660k mt of corn, 110k mt of wheat last week on
price dip has their short term needs met - traders claim they need to buy
more but will wait for further weakness.

-- Commodity Marketing specialists predict grain storage squeeze on
increased corn plantings and higher yield vs soybeans - est. current storage
capacity of 11 bln bu.

-- Traders in the far east expect buying of US corn, soybeans and wheat to
slow amid unstable prices, high freight rates and reduced meat production.

-- Some concern that high freight rates could hamper demand of US grain.

-- The Commitment of Traders report with Options as of February 27 shows
Funds:  Corn  Long  346,048  off 720   Soybeans Long  96,233  up 2,881
Wheat  Long  24,241  up  12,458    Meal  Long  48,466  off 14,927   Oil
Long  69,700  up  814

-- The Supplemental report shows Index Funds:  Corn Long  361,720  up  8,651
Soybeans  Long  135,639  off  1,153    Wheat  Long  194,427  up 2,089

-- Funds continued to liquidate long Friday but not as aggressive as
Thursday.  Friday Funds sold 6,000 Soybeans, 4,000 Corn, 1,000 Wheat, 3,000
Meal. Bought 4,000 Oil.

-- Friday saw more liquidation with Corn open interest off  5,900, Soybeans
off  5,832, Wheat off  2,852.

-- Deliveries:  Corn  129 thru 2/22/07 no stopper    Soybeans 909 thru
3/2/07 no stopper  Wheat  2,433  thru 3/2/07   Meal  598 thru 3/1/07  ADM
stopped 63  Oil  2,321 thru  3/2/07 ADM stooped 174, Term 186

-- Other Outside Markets:  Gold trading lower this morning, Crude Oil
trading lower, the Dollar is trading lower vs. the Yen, higher vs. the Euro,
Chinese Soybean, Meal and Oil futures closed lower, Corn higher.

-- Corn spreads: IA 500 SK/SN, FCS 200 CH/CK, Fimat 200 CN/CZ

Exports: Taiwan tendering for 29,000 mt. US Corn and 16,000 Soybeans for
Apr.

Cash Markets:

CIF Corn:  Mar. +30 to +32, LH Mar. +31 to +33, Apr. +31 to +33, May +33 to
+37, June +32 to +34, July +32 to +36, Aug. +35 to +40

River house bids steady STL. unch at +1, Morris IL. River  unch at –19,
Havan –15.

PNW Corn trains steady:  Mar.  +60K   Apr. +66  May +68

NS Corn     Mar. -12    AMJJ  -4    Oct. -25   Evansville  CSX  -10K

TREND:

Our weekly reversal on corn has left the February highs as another near peak
for this bull run. However, we should find support in the $3.90 to $4.00
range on the long term charts. Look for this corn trade to settle into a
near term range with May showing potential to test the gap under $4.10.
Corrective targets come in a $4.16 1/4 and $4.05 ¾. Still see this $4.10 to
$4.20 range as support and would be looking to try the long side from $4.16
to $4.10. Risk a close under the $4.00 gap area. Look for s/t problems from
$4.30 to $4.35. Have to lighten up there for now as we develop a s/t range
again. For the long term trade go to the otm calls, look at ck 450 calls.
The December chart is also setting up a test of the $3.90 to 4.00 base. Look
to buy breaks starting at $4.00. Topside should near $4.20 for the moment.
At this point, it still looks like we’re trying to adjust to this $4.50 area
which could give us 10% type corrective trade.



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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