Linn Group Morning Corn Comment

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

The corn market sold off on Thursday as traders looked at a more favorable
forecast over the next 5-8 days as an opportunity for farmers to get into
the fields and start planting corn.  Corn remains very volatile as we had
the May contract down almost 12 cents at one point only to settle only down
2 cents.  This volatility will continue as farmers begin to plant corn and
traders try to estimate how much corn is planted.  The weather picture seems
better than it did for planting corn a couple of days ago, but nothing is in
the ground yet, so traders will be cautious.  Funds were actively selling
again yesterday as we had them selling over 5,000 contracts by the end of
the day.  Each side of the market will be looking at the weather forecast to
favor his positions.  The bear will talking about the lack of rain over the
next 5-7 days helping to dry fields and the bull talking about the below
normal temps keeping the soil temperature remaining low, so even if they can
plant corn, it isn't going to germinate.  Export sales remained strong, but
couldn't provide any bullish momentum, which as we said earlier in the week
is bearish.  It is encouraging to see lower prices spark greater demand,
allowing many traders to keep their export numbers strong.  Volume remains
strong and open interest was down another 15,000 contracts yesterday.

eCBOT market closed higher overnight after being higher, then lower, then
higher.  Expect more volatile trade today and possible profit taking going
into the weekend where a change in the weather could create violent moves on
Sunday night.  Great export numbers were unable to stir any buying interest
in the corn market and actually, corn opened 5 lower yesterday morning.  As
we said earlier in the week, when we get bullish news and it can't rally the
market, that is bearish and watch out for further liquidation.  Technically,
the weekly close in corn will be ugly and that is on top of all the bullish
news around the corn market this week.  What does this tell us?  Obviously,
the market does not believe that corn will not get planted and that these
early delays can easily be made up with a few good days.  Corn will remain
volatile until planting begins in earnest and you can expect wild days,
especially Sunday nights, for the near future.  Today's trade will depend on
fund activity and possibly some profit taking into the weekend in case of a
change in the weather forecast.  The market will try and open higher today,
but I don't know if there is trade there to support a higher opening.  I
think you can buy a dip today, looking for a rally on short covering into
the weekend.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                360^4    1^6                   362^6    355^0

ZCN7                372^4    1^0                   374^6    367^0

ZCU7                379^2    1^2                   381^2    375^0

ZCZ7                 388^6    1^4                   390^4    382^4

Early Opening Calls: 1 to 2c higher

Top News

-- Export News: 10,000 mt of Chinese corn sold Japan, acc. to traders

-- Funds reported long 280,000 Corn contracts.

-- Long term average weekly corn planting for upcoming Monday report at 10%;
many see Monday's report below trend line plantings.

-- US Environmental Protection Agency passes ruling that would put
ethanol-for-fuel plants on the same emissions standards as ethanol-for-food
plants;  seen as beneficial for alternative fuel expansion

-- Dalian Corn futures prices fell.  Volume also fell from the previous
trend.

-- eCBOT Vol: 282,199; Pit Vol.: 120,952; Open Interest change: -15,968

-- Weather shows Normal to Below Temps. Normal to Below Precip. over the
next 6 to 10 days.

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

Cash Markets

-- CIF Corn:  Apr. +24 to +26, LH Apr. +25 to +27, May +28 to +30, June +25
to +28, July +25 to +28, Aug. +30 to +32, Oct. +27 to +32.

TREND:

Markets are certainly being led by wheat. We will look for more tomorrow.
The corn market may have gotten enough of the long liquidation done today
but not sure---what I am sure of is that there continues to be consumptive
interest that wants to own corn on a test of 3.50. Cash corn firmed enough
this week that caused some bear spreads to cover. Not sure there is enough
to cause the spreads to gain much but certainly some signals that they will
have problems continuing to weaken?

Ethanol margins have continued to gain all week. Ethanol flat price has
gained on RRB all week back to 1 to 12 cents over after trading for a short
time at a discount last week. This has pushed profitable ethanol  margins
all the way into Mch of next year. I still suspect the slow down in
petroleum refineries is self serving---they like $28 a barrel crack
margins---but if it helps the ethanol industry bring up a couple more plants



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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