Linn Group Morning Corn Comment

CHICAGO - Mar 13/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off yesterday with the May contract down 8 ¼ or close
to 2%.  Traders continue to talk about the volatility of the corn market as
different analysts release their acreage estimates.  Yesterday, ADM released
their corn acreage estimate at 88.5 mil acres and the bean estimate of 67.2
mil acres.  This compares to 78 mil in corn and 75.5 in beans from last
year.  This released caused the corn market to sell off and traders to put
on the long beans/short corn spread, adding to the pressure.  The funds were
pretty quiet during the day, selling close to 2,000 contracts, but in the
last hour, the funds got much more aggressive selling close to 10,000 by the
end of the trading session.  Technically, May corn dropped below its 50 day
moving average for the 1st time since January and this probably was caused
another round of sell stops and more pressure on the corn market.  Corn
planting has started across the South with Texas 20% planted, Louisiana 18%
and Georgia 8%.  Not big growing states, but states where we could see a big
increase in acres, so it will be closely watched.  Weather remains a factor,
but record or near record warm temps across the Midwest will be looked as
negative for corn.

eCBOT market was pretty quiet overnight on decent volume and the May
contract closing slightly lower.  The most talked about trade seems to be
the long beans/short corn as we continue to get acreage estimates showing
big corn acres and lower bean acres.  The bottom line is that corn is going
to be very volatile until we get the USDA report later this month or we
actually get planted acres.  Informa was supposed to release their acreage
estimate but has delayed that release until Friday with rumors that they
have increase their corn acres and lowered their corn acres from their
original estimate released last month.  Look for the corn market to open
lower today on no new news and see if the funds come after the corn market
again today or if we see continued bean/corn spreading which will add
pressure.  Some traders thought we would have seen more fund selling last
night after closing below the 50 day moving average and because we didn’t
see that sell off last night, the market could find support down here.  We
believe we will find commercial buying down at these levels and demand is
going to stay strong.  Goldman Sachs also added support by saying that
ethanol is profitable again with the lower corn prices and higher gas
prices.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH7                399^0    -0^6                  400^6    398^0

ZCK7                408^4    -0^6                  410^6    407^4

ZCN7                418^6    -1^0                  420^6    418^0

ZCU7                408^4    -1^4                  411^4    408^4

Early Opening Calls: 1 to 2c lower

Top News

-- Export News: Taiwan tendering for 60,000 mt. US or Argentine Corn for
Apr/May

-- Texas Corn planting 20% finished, Louisiana Corn planting 19% finished.

-- New corn import quota for Mexico totals 1.6 mln mt & runs through May 31.

-- US Sen. from S Dakota, Thune, is asking the EPA to consider certification
of 20% ethanol blend in automobile fuel.  Currently auto fuel has 10% blend
with 90% gasoline.

-- AAFC:  Canadian '07/'08 corn production to jump to +20% on higher planted
acreages - crop expected to be a record for the country - will likely reduce
the country's dependence on foreign corn imports

-- ADM forecasts corn acres for Spring 2007 could reach 88.5 mln acres

-- Corn spreads: Tenco 1,000 CK/CN, FCS 900 CK/CN, Fimat 500 CK/CN, Eagle
2,000 CN/CK

-- China's National Bureau of Statistics said today that consumer prices
rose 2.7% in February after a 2.2% jump in January

-- Record temps are expected across the middle US today, scattered rains for
LH of week.

-- OPEC Sec. General suggests the cartel will likely leave production quotas
untouched at its Thursday meeting

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

-- Volume was 257.6 with open interest down 8.2 to 1435.2

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

Cash Markets

-- CIF Corn:  Mar. +29 to +31,  Apr. +28 to +31, May +34 to +36, June +29 to
+31, July +32 to +35, Aug. +33 to +38, Oct. +30 to +32.

TREND:

The sell stops along with bear spreading in corn led the market to take out
last weeks lows in corn setting up a serious test of key support. The move
below the 50 day moving Avg adds a reason for the funds to be
sellers---liquidation now but could spread to new shorts? This is a major
break that many users needed to extend coverage. Users coverage has been
very slow to rebuild as they use through the corn accumulated at harvest.
Note the rally in ethanol, pork, beef, milk, and poultry over the last
several weeks adds feeding margins so that this break should be well
received. The market has left gaps over the market in the front months of
corn that may add to the down side pressure but the fact that users need
this break continues to make me believe it will not go too deep---this
market will not turn into a negative trend. Maintain farmer hedges but users
should be into a scaled down approach in taking coverage in corn here and
lower.



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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