Linn Group Morning Corn Comment

CHICAGO - Mar 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market recovered off the early lows yesterday as we saw most months
close higher.  Traders said funds led the market lower early in the day as
corn was almost 40 cents off the highs in the May contract but attracted
commercial pricing.  We saw 5-6 different firms buying May, July, and Dec
yesterday which was largely considered commercial buying by the trade.  The
long liquidation by funds we have been seeing over the last couple of days
has traders saying it was being helped by the uncertainty in the US stock
markets and sell off by other outside markets.  The commercial buying we saw
yesterday just underpins what we have been saying about the corn market
being strong long term, but will be very volatile in the near term.  Traders
will cut their positions on sell offs, but the commercials will be there to
support the market.  I don’t know if we will find buying as the market goes
higher and traders feel we will probably find more selling on rally’s.
Funds were actually net sellers of 1,000-2,000 on the day yesterday.
Weather remains a non-issue as much of the Midwest has gotten excellent
moisture this winter, but it will become bigger and bigger as we approach
the planting season.  Argentina reports some delays in harvest because of
precipitation, but it doesn’t seem to be a long term problem.  Farmers are
making decisions on planting corn or beans and rising fertilizer costs will
make that decision harder.

eCBOT market was higher overnight as we saw some carry over from the rally
yesterday as the May contract closed almost 2 higher on decent volume.
Yesterday we saw the commercials in the market buying the lower corn market
or selling puts as we saw the funds try and push the market lower.  I think
over coming weeks we are going to see a very choppy trade until we get the
USDA crop report at the end of the month.  We will continue to see user
pricing on sell offs and we will see fund selling on rally’s.  I don’t think
we will see commercial customers buying on rally’s and with no new news, I
don’t think we will see funds buying on rally’s.  Talking to traders this
morning, they feel we are in a ranged trade and we will find fund selling on
any rally today unless new news hits the market.  The commercial buying we
saw yesterday has probably established a bottom for now, but as we have said
over the last 6 months, the funds control the direction of the corn market
and it is the leader of the grain complex.  USDA report released on Friday
is minor and probably will be ignored by the market, but when the corn
market is as tight as it is right now, every piece of information will be
over analyzed.

eCBOT Overnight

Contract            Last      Change High      Low

ZCH7                418^4    1^2       420^2    417^2

ZCK7                428^4    1^6       430^4    426^6

ZCN7                437^2    2^2       439^0    435^2

ZCU7                421^6    0^6       423^4    420^6

Early Opening Calls: 1 to 2 cents higher.

Top News:

-- Brazil’s Ag Minister says he will be lobbying Pres. Bush for at least a
partial exemption from the present tariff for Brazil ethanol exports to the
US.

-- The Argentine Grain exchange said Corn harvest was slowed last week with
4% of the crop harvested vs. 7 ½% complete last year on this date.

-- Fund activity fairly light Monday. Funds sold 4,000 Soybeans, 1,300 Meal,
1,700 Oil.  Bought 2,000 Wheat.  Corn  even.  Commercials were good buyers.

-- Asian stocks market trading higher overnight up 1 to 2%. Dow futures up
98 points.  Chinese Soybean, Corn, Meal and Oil closed higher.

-- Outside Markets:  Gold trading higher this morning $647.00 up $7.70,
Crude Oil trading higher  $60.67 up .60, The Dollar is trading higher vs.
the Yen, lower vs. the Euro.

-- Corn spreads: Rand 500 CZ/CK, 800 CK/CN, RJ  500 CN/CZ, 600 CH/CK

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

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

Cash Markets:

CIF Corn:  Mar. +31 to +33, LH Mar. +31 to +34, Apr. +32 to +35, May +34 to
+37, June +30 to +34, July +32 to +36, Aug. +36 to +38

River house bids firmer STL. up1 at +2, Morris IL. River  up 1 at –18.

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

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

TREND:

It may be that trade gave some indication of the lower end of the developing
trading range today. May be that we give back some of the rally tomorrow but
the commercial voted today by buying corn and oil for pricing needs. It
resulted in reversals but is right back into resistance where some fund
length will want to come away. Same for some cash connected bulls.

Corn got far enough off the highs to get some user pricing. The chart at the
right shows the gap support below the market and the gap resistance over the
market. The reversal back up came after 4 days of negative trend and should
not have been a surprise. I did not expect it until tomorrow so missed
getting short calls rolled into puts. Did sell some out of the money puts to
take off the down side of new crop corn hedges.



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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