Linn Group Morning Corn Comment

CHICAGO - Apr 4/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was a mixed bag yesterday as we had the near by contracts
down on the day and the deferreds higher.  Traders seemed to have many
things to blame on the May and July selling off including unwinding of bull
spreads, bear-spreading, and inter-market spreading between corn/beans and
corn/wheat, and lower crude oil prices.  Futures volume was very heavy,
there was big put selling, and funds were very active, selling app. 10,000+
contracts by the end of the day.  Reuters estimated that over half of the
volume on the screen was from spread trading.  Despite the increased demand
for corn, the market believes there will be plenty of corn available through
the end of the marketing year which is August 31st.  The stocks number was
lost in the USDA report last week, but it was increased above the estimate
and that is part of what has caused the sell off in the May and July.
Weather remains a focus for the corn market, with it being very cold across
the corn belt for the next week and the ground is wet, but it is still
early.

eCBOT market was higher overnight as the market got its first whiff of a
weather market with the forecast of a freeze all way down to Kansas.  This
cold weather is not conducive to planting corn as the major corn growing
areas are wet and the cold weather will not help in drying the ground.
Remember, many traders have said the 90 mil acre estimate released by the
USDA last week is dependent on an almost perfect planting season.  We are
still early in the game, but traders will be very nervous because there is
very little room for error.  The corn market will have trouble rallying,
unless wheat gets carried away and is 20 cents higher, but very few traders
will be willing to sell flat price with almost nothing planted yet.  This is
part of the reason we are seeing so much spread trading happening as we have
traders that want to be short corn, but they are experienced and not stupid.
We look for the corn market to open higher but to be a follower today with
the wheat leading the grain complex.  After yesterday’s action, it is
obvious to us that the corn is the leader, but today, wheat has more at
stake with this cold front and possible freeze.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                352^2    6^0                   352^2    347^0

ZCN7                364^0    5^6                   364^0    358^6

ZCU7                367^6    5^6                   367^6    362^0

ZCZ7                 372^4    5^0                   372^4    368^0

Early Opening Calls: 5 to 7c higher

Top News

-- China's NGOIC raised its 2007 corn output estimate by 1 mt to 147 mln mt.

-- China's NGOIC raised its 06/07 corn production to 144.4 mln mt, a rise of
400,000 mt from its March forecast

-- Grain South Africa has reduced corn production estimates yet again due to
drought;  this time reducing it -11% to 6.907 mil tons

-- Heavy rains delay Argentine crop harvests:  only 27.7% of corn acres
harvested (2.7% more than last week, 2.3% behind last year) - yields in
Cordoba growing-region seen as very good, acc. to the BAGE

-- Dalian Corn Markets: unchanged overnight

-- Funds continued to liquidate longs in Corn selling 10,000 contracts
Tuesday.

-- eCBOT Vol: 270,503; Pit Vol.: 154,726; Open Interest change: -11,613

-- Weather: Below Temps in the east, Normal/Above normal temps in west.
Below normal precip.

-- Colorado State economists predict 9 hurricanes in the Atlantic Ocean in
'07 year - raised +2 from Dec estimates  (17 tropical storms expected as
well)

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

-- CME postpones special shareholder meeting scheduled for April 4, 2007.
The postponement was to give CBOT time to review ICE merger proposal.

Cash Markets

-- CIF Corn:  Apr. +19 to +22, May +28 to +30, June +24 to +28, July +29 to
+33, Aug. +?? to +34, Oct. +27 to +35.

TREND:

We bought KC May and sold Chicago May. Looking for a trade for the next two
or three weeks. Wheat market will be very nervous about potential damage
from very cold temps into the weekend. This market should have limited
downside potential until next week.

I am on record that corn will not go below 3.50. Obviously I am wrong. Very
major support on the long term charts at 3.35. I do not think the market
will give the user that good of an opportunity. The bear spreads traded out
to 9 ½ cents today. A trade out to 15 is all that should be expected before
we see a snap back.



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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