Linn Group Morning Corn Comment

CHICAGO - Apr 5/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market seemed to run into the perfect storm for a rally yesterday
as we had over sold conditions technically and a weather forecast that is
not conducive to planting.  As one trader said, weather and more weather
that is all the market is looking at right now.  Bulls want to play up the
cold/wet spring not allowing farmers to plant as many acres as they
anticipated and the bears telling anybody that will listen that there is
plenty of time to plant corn.  The weather through the middle of April is
forecast to not be conducive for corn planting.  The problem this year is
the estimate is so big that even with improved technology, farmers will need
to have good conditions to get all these acres planted.  So. Korea was in
the news seeking 110,000 tones of corn from the US.  Volume was strong but
not as big the last 2 days and funds were back on the buy side at 10-15,000
contracts by the end of the day.  Wheat is probably the leader of the grain
complex right now as this freezing weather can actually hurt/kill the wheat
crop while all the cold weather can do to the corn is delay planting.

eCBOT market was pretty quiet overnight closing unchanged in the May and
December.  Traders are looking at the weather forecast almost on the hour to
check and see if there is a change in the forecast to give them the edge.
As one trader said this morning, when we get into weather markets, you can't
trust the technicals and markets can blow right through support and
resistance numbers like they don't exist.  Export sales were a little week
this morning at 550,000, below the estimate of 800,000 to 1 mil.  This is
not completely unexpected as we are seeing So. American crops coming out
onto the world market and there was another increase in the estimate of the
total Argentine corn crop.  We look for the corn market to follow the wheat
market higher today on the cold weather forecast, but corn will probably not
get carried away to the upside until we get farther into April and corn
planters are not running strong.  Sunday night will probably be the big
night as we could have these markets limit up or limit down depending on the
weather forecast.  Buckle your seatbelts.

eCBOT Overnight

Contract            Last      Change High      Low

ZCK7                359^2    0^0       361^0    357^2

ZCN7                370^2    -1^2      372^6    369^0

ZCU7                374^2    0^2       376^0    372^2

ZCZ7                 380^4    0^0       382^0    377^4

Early Opening Calls: Mixed

Top News:

**USDA Weekly Export Sales 4/5, Corn:  550k tons, expected = 800k-1 mil

-- Export News:  South Korea passed on tender for 110,000 mt. opt. org. non
GMO Corn for July.

-- CONAB:  Brazilian corn production seen reaching 51.1 mil tons, +4.8%
higher than previous estimates

-- Beijing likely to increase subsidies paid to Chinese farmers, to
encourage expenditures on new machinery, techniques, acc. to the country's
official news agency

-- Funds bought an estimated 12,000 contracts of corn Wednesday.

-- Corn spreads: Fimat 1,000 CN/CK, Rose 1,000 CZ/CU, ADM 500 CZ/CU, Fortis
500 CZ/CN

-- Outside markets:  Gold trading  higher $673.00  up  .90, Crude Oil
trading slightly higher  $64.42 up  .04, Dollar steady, Chinese ag futures
unchanged

Cash Markets:

CIF Corn:  Apr. +19 to +21, May +28 to +31, June +24 to +28, July +29 to
+33, Aug. +?? to +34, Oct. +27 to +34.

River house bids steady firm   STL. up 1 at -5, Morris IL. River steady  at
-19, Havana steady at -20.

PNW Corn trains steady : Apr. +70  May +75  June  +70

NS Corn     Apr. -13   May -11 J/J -14   Oct. -30   Evansville  CSX  -10

TREND:

Frost damage to wheat can be a real market maker---the market is set up for
a surprise. The condition reports are near perfect with crop estimates
growing with each rain across the southern plains over the last several
weeks. The market will not set back in front of the 3 day weekend. If we
confirm temps that could create damage over the weekend, the rally that
ensues on Sun night could be big. Wheat has become the short leg here and
could have a bigger reaction to any damage.

The spreads in Chi are so close to full carry that this is a low risk way to
trade damage---warning to spec bear spreads----there is too much risk here
to be involved. If there and reluctant to come away from bear spreads---buy
a call immediately. KC stocks are the tightest---loaded another 500 thou
from delivery stocks again today. This makes K/N a cheap call but the gains
are limited if there really is damage---15 cents gains in the spread vs. 75
to 1.00 potential gains in flat price

Corn will also react to the cold---island bottom potential if we continue
firm overnight. Spreads here have a negative bias again but I will not
participate---too much risk. First major resistance on the rally back would
be around 3.95 to 4.00 in CN.



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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