Linn Group Morning Corn Comment

CHICAGO - May 1/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Better planting conditions pushed the price of corn lower on Monday as the
window of opportunity that all the traders have been talking about since
last week is here and now.  The July contract closed 6 ½ lower and the
December was 3 lower.  Volume was relatively light at app. 200,000 contracts
and the funds sold 5-7,000 contracts.  The wet and cool weather that has
plagued the planting season across the Midwest so far this spring is giving
way to warmer and dryer over the next week or so except for a few scattered
showers.  This break that “everybody” has been waiting for will put farmers
to the test to see how much corn they can plant and as fast as they can
plant corn.  Talking to a farmer in Iowa yesterday, he was surprised on how
much he was able to plant and how much the ground has improved since last
week when they received a lot of rain.  Traders also said that heavy
deliveries put pressure on the May contract, especially as most of the
deliveries were issued by a large commercial player.  Exports were quiet
over the weekend as was cash sales as many farmers are concentrating on
planting corn.  Weather in So. America remains problematic for corn
harvesting, but not yet burdensome as rains continue.

eCBOT was higher overnight based on the crop progress report released after
the close showing 23% of the corn planted up from 12% last week vs. 48% last
year and 42% 5yr average.  The 23% number was below trade estimates of
30-35% planted, but inline with the Linn Group estimate of 24%.  July closed
4 ¼ higher and December closed 6 ¼ higher overnight on the back of the lower
crop progress report.  Some traders want to point to the window of
opportunity as getting narrower as the rains seem to be more numerous and
have greater coverage.  Many traders are sitting on the sidelines as they
can’t get a handle on what corn is going to do in the near term.  Demand for
corn isn’t going anywhere long term, but will it disappear in the near term?
Traders say any rally in corn, especially in the old crop, will be met with
selling pressure because it is historically tough to hold spring rally’s.
Assuming corn gets planted according to estimates, but some of it will be
late planted, so is there going to be a reduction in yield in app. 20% of
the corn planted?  Who is able to predict growing conditions this summer?
Corn is still the key market in the grain complex and the direction of corn
will probably dictate the direction of the other grains.  We look for old
crop corn to open a little higher and new crop to open 3-5 higher.  Traders
will be watching the weather and trying to decide if there is any changes
that will make a difference.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                361^0    3^0                   364^6    359^2

ZCN7                371^6    4^2                   375^0    369^0

ZCU7                370^0    4^4                   371^4    368^4

ZCZ7                 370^6    6^2                   371^0    368^0

Early Opening Calls: 3 to 5c higher

Top News

Corn Progress & Conditions Mini-Recap

Corn % Planted:  23%; 11% week ago; 48% yr ago week; 42% 5 yr avg.

Corn % Emerged:  4%; 3% week ago; 12% yr ago week; 10% 5 yr avg.

Barley Progress & Conditions Mini-Recap

Barley % Planted:  43%; 27% week ago; 32% yr ago week; 41% 5 yr avg.

Barley % Emerged:  15%; 13% week ago; 7% yr ago week; 14% 5 yr avg.

-- May 17 Philippine to tender for corn June delivery

-- Chinese authorities refuse to increase minimum price paid to farmers for
internal procurement of corn, wheat and rice, acc. to China news agencies

-- Monday's Corn Weekly Export Inspections:  41.588 mln bu.; avg expectation
37.5 mln bu.

-- Brazil and Venezuela agree to ethanol pact - Venezuela to import
Brazilian ethanol despite previous comments by Venezuelan leadership
criticizing Brazil's food vs. fuel policies, acc. to statements by both
countries

-- An estimated $70-200 billion have been invested in commodity-related
products - the number was around $10 billion in 2002, acc. to analysts

-- Shipping experts say upcoming large ship deliveries will help lower
shipping costs in 3 yrs time by 40%.  Hedge fund operator (& former shipping
exec) see current shipping rates falling in the near & long term

-- CBOT May corn deliveries: 1758 contracts.

-- CBOT May ethanol deliveries: none.

-- Dalian Corn futures closed May 1 - 7

-- eCBOT Vol: 131,915; Pit Vol.: 42,317; Open Interest change: -3,527

-- Weather:

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

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Apr       +10/12 K           +33/36 K             +15/20 K         +65/80 K
225

May      +12/16 K           +34/37 K             +16/20 K         +60/80 K
225

Jun       +8/142 N           +30/32 N             +4/7 N            +55/65 N
250

Truck                Beans   Corn     Wheat  Meal Hi-pro        Oil

Chicago                       -25 K    -6 K     -38 K

Toledo              -26 K    -20 N   -50 K

Dec ILL            -30 N    +0 K                -14 N               -200 K

TREND:

Corn calls are more difficult --- I understand where we are in planting
progress and look to get a lot done this week---but if you were looking for
more progress and were short due to this, I understand where some short
covering could come from. Look for this market to make another stab at stops
on a close under 3.60 in CZ. Come away from shorts on a trade down to 3.50.
Slightly weaker barge basis today was not matched in the rail market. Also
seeing some export demand in the lakes over the last week. Late in the
session the corn spreads weakened with N/Z trading down about 3 cents on the
day back to near 2 cent inverse. This continues to be a trigger that should
start to improve corn flat price trade should it start to gain ---taking out
the reactionary highs of last week?



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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