Linn Group Morning Corn Comment

CHICAGO - Mar 7/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market set back after the rally on Monday at the end of session
provided some relief after the sell off.  Volume was heavy early as the
market tried to rally, but the funds were there to sell the market and then
volume died.  Funds were net sellers of 2,000-3,000 at the end of the day.
Corn prices remain up near the 10 year highs and with no new news and no new
fund money, this market will have trouble rallying and it should find
support from commercials because of strong demand.  The May contract closed
almost 5 lower on light volume as the corn market will probably remain
choppy into the release of the USDA report on Friday.  The report is minor,
but traders are looking at any and all news.  Some traders that corn is in a
consolidation stage after making the highs and we have seen some of the
outside markets stabilize this week.  Weather remains a small concern, but
as we move along this month, traders will start to focus on the planting and
growing seasons.  The Midwest has received plentiful moisture over the
winter, but in the back of traders minds was the forecast for a cool/wet
spring which would delay corn planting and cause that much more volatility
for the corn market.

eCBOT market was lower overnight on light volume with the May contract
closing 2 ½ lower.  University of Missouri think tank, Food and Agricultural
Policy Research, released their production numbers inline with the USDA
number last week at 86.7 million acres this spring, up 8.4 mil from last
year and corn production this year will reach a record high of 12.148 bil
bushels.  They based their numbers on a yield of 152.9 and they had ending
stocks at 837 mil bushels.  Don’t know if these number will have any affect,
but it is the start of analysts/academics releasing their estimates, or at
this point in the season, guesstimates.  Traders look for the corn market to
open lower today and we will probably grind lower without any real news.
Some weather forecasts released this morning have the warm weather extending
past next week and into the later part of March which is probably considered
bearish corn.  Weather will be the key to the corn market over the next 6-8
weeks because of short stocks, any weather scare will push corn higher, but
if the corn crop experiences no delays in planting, we could drop very
quickly as funds run for the hills and the market doesn’t give you a chance
to get out.  Be protected.  If you are long flat price futures, make sure
you are long puts as protection because in limit up/down markets, stops will
be worthless.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                409^4    -3^0                  412^2    409^2

ZCK7                419^4    -2^4                  422^6    419^0

ZCN7                428^6    -2^0                  431^6    428^0

ZCU7                415^2    -2^0                  416^6    414^6

Early Opening Calls: 2 to 3c lower

Top News

-- Trade officials in Mexico announced plans to open 1.4 mln mt quota for US
yellow corn for animal feed.

-- Mexican officials say if the WTO opens investigation into US corn subsidy
payments - they will join.

-- Chinese NGOIC:  Record corn crop expected in '07:  146 mil bushels (+1.5%
over last year, +0.75% over previous estimates)

-- Chinese NGOIC raises corn acreage by 1% from 2006.

-- Brazil projected Corn production at 48.7 mmt. up from last months
estimate of 47.9 mmt.

-- Corn spreads: Tenco 1,000 CK/CN, ADM 300 CH/CK, FCS 300 CH/CK, RJ 300
CH/CK

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

-- Volume was 187.7 with open interest down 10.5 to 1441.9

-- Outside markets:  metals lower, energies higher, dollar mixed, stocks
lower

Cash Markets

-- CIF Corn:  Mar. +29 to +31,  Apr. +30 to +33, May +34 to +36, June +32 to
+34, July +32 to +36, Aug. +36 to +38, Oct. +30 to +34.

TREND:

Look for the market to continue to chop around for the rest of the week.
Look for support on weakness from commercial pricing. Suspect we have to get
back through the lows to see anything major. Will see a stepped up farmer
marketing on a 10 to 15 cent rally in corn and 25 cent rally in beans. Still
some spec longs that will want to exit on that type of rally as well.



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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