Linn Group Morning Corn Comment

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

The corn market was 5% lower yesterday closing limit down after the release
of the USDA planted acreage estimate showing 90.5 mil acres estimated to be
planted vs. the guesstimate of 88.0 mil acres.  This was a much bigger
number that many traders were looking for from this report, but not
completely unexpected because some traders were talking about an increase of
12 mil acres.  As on trader said, he wasn't as surprised by the huge acreage
number, but that there was 6 mil added for major US row crops.  This
increase in acres would be the most acres planted since 1944 and option
activity pointed to the May corn being down another 15 cents.  The bottom
line isn't the estimate, it is getting all these acres planted, having
enough specialty seed to plant, and having enough fertilizer for all these
acres.  Weather over the next 45-60 days will be vital to the number of
acres planted, not what farmers told the government the last month or how
much seed has been sold.  Funds were obviously selling yesterday but we
won't know to what extent because the limit down stopped a lot of selling.
Wet weather becomes the greatest obstacle to how many acres of corn gets
planted because it is obvious that farmers are going to try and plant as
much as possible.  Not a lot of field work has been done yet and the weather
pattern doesn't point to a lot getting done this week.

eCBOT market was limit down again in the May contract, but the market did
trade limit down and the December didn't close limit down.  There was a lot
of fund selling that needed to get done after Friday's action and the market
will probably try and find a bottom down here, especially in the deferred
months.  The realization is that it is real easy to tell somebody that you
are going to plant 100% corn acres, but it is another thing to get it all
planted and have trend line yields.  The demand for corn is still strong and
the demand for ethanol is still strong and we should see that reflected in
the price of the deferred contracts finding a bottom and will probably get a
bounce.  Look for the corn market to be much lower again today with another
round of fund selling, but I wouldn't be surprised if we see a bounce off
the limit down in May.  This last break should great bigger demand for
exports.  The big question is whether or not farmers will change their minds
now that we have had the big sell off and prices don't look as good as they
did a month ago.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                354^4    -20^0     359^4    354^4

ZCN7                365^4    -20^0     373^2    365^4

ZCU7                362^6    -18^4     372^0    361^2

ZCZ7                 364^6    -18^6     372^2    363^4

Early Opening Calls: 20c lower

Top News

-- Japanese Marubeni sells total 165,000 mt of opt origin corn to S Korea.
Traders report $222.97/t.  First shipment is for Sept 6 arrival; second for
Sept 10 arrival

-- Russian Ag. Ministry proposed  price levels to buy grains this yr. in an
effort to support domestic producers - analysts SovEcon feel prices are too
low.

-- WHO head calls the current spread of H5N1 bird flu into Europe/Africa
"unprecedented", calls for vigilance against a new pandemic

-- Bangladesh sees spread of avian flu to 5 additional farms despite
previous culling efforts

-- Upcoming Easter holiday will postpone EU's Thursday grain mgmt committee
meeting this week

-- South Korea and the United States reach landmark trade compact -  SKorea
compromised on the beef issue (gradual reduction of 40% tariff), US gave
ground on South Korean products made in North Korea;  issue of rice largely
unresolved - $20 bil extra trade flow expected between the two nations
because of deal

-- Aussie Gov't weather study in Southwest Australia concludes hotter and
drier conditions ahead due to climate change.

-- Chicago Board of Trade announces record business: volume breaking
quarterly/monthly records

-- Ecuador announced force majeure on oil exports because of Amazon protests
and low stocks in the refinery system.

-- The Commitment of Traders report with Options as of  March 27 shows
Funds: Corn Long  262,828 off 10,902

-- Dalian Corn Markets: sharply lower overnight following ecbot's lead

-- eCBOT Vol. 115,274; Pit Vol. 90,346 ; Open Interest Change: +20,497

-- Weather: Below Normal Temps. Below Normal Precip. 6-10 day outlook

-- Outside markets:  Energy lower, US $ lower vs. Yen & Euro, Gold & Silver
easier

Cash Markets

-- CIF Corn:  Apr. +17 to +20, May +26 to +28, June +21 to +25, July +27 to
+32, Aug. +31 to +34, Oct. +25 to +31.

TREND:

I will remind everybody one more time that this is a demand driven market
that will most likely have more long reaching affects on flat price than a
rally due a supply side disruption. Those tend to be much shorter lived.
Farmer selling will go back under a rock on this break and demand will
surface in a big way.

Do not press these prices and look for the potential for stability at the
worst and more likely a bounce back. It should be a while before corn takes
out the lows made in the synthetics today.



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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