Linn Group Morning Corn Comment

CHICAGO - May 8/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The weather forecast for drier weather pushed corn lower, July down 11 ¼ and
December down 7 ¼, which caught many traders off guard before the release of
the USDA crop progress report.  Different analysts have said the ground is
drying out and the rain the Midwest received over the winter and this spring
has the sub-soil and top-soil moisture at good levels.  Corn plantings have
been lagging because of the wet spring, but now that farmers have a window,
they are going to take full advantage and plant as much as they can in as
short of time as they can.  There are still certain areas that received
localized rain, but for the majority of the Midwest, corn planting is going
strong.  Exports were quiet over the weekend.  Volume was moderate to light
on Monday at 225,000 contracts and fund activity was light, sold 6,000
contracts, considering we were down almost 12 cents in the July.  Traders
pointed to the spread activity as also a catalyst for the sell off in corn
as we had traders buying wheat/selling corn and dumping the bull spreads,
buying Dec/selling July corn.

eCBOT was led lower by the USDA crop progress report showing corn as 53%
planted vs. expectations of 40-44%.  The corn planting are still behind as
the 53% compares to 67% last year and the 5yr average of 63%.  On top of
these numbers, different people we have talked to are saying that corn that
is up looks great.  Traders will now focus on next week’s report as many
analysts now think we could get back to the 5yr average.  Trying to pick a
bottom in the corn market is very dangerous right now.  Corn is getting
planted and will probably get planted with the number lost acres app. in
line with averages.  The real question will be lost yield because of late
planted corn and you won’t know about that for a long time.  The problem is
that because of big demand and tight stocks, the US can’t afford to have any
problems this summer.  Argentina’s Ag Secretary has opened the door for more
exports after signing a resolution reopening corn exports, which has been
closed since November.  This will add pressure to US corn as different
countries will now export from So. America instead of the US.  Look for corn
to open inline with the closes overnight, but be careful picking bottoms,
because an attempt to rally or bounce higher will probably be met with fund
selling.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                357^2    -12^2                 365^2    357^2

ZCN7                368^2    -10^6                 373^0    367^6

ZCU7                370^0    -10^6                 377^0    369^6

ZCZ7                 372^4    -10^6                 376^0    371^0

Early Opening Calls: 10 - 12c lower

Top News

--Corn Progress & Conditions Mini-Recap--

Corn % Planted:  53%; 23% week ago; 67% yr ago week; 63% 5 yr avg.

Corn % Emerged:  14%; 4% week ago; 23% yr ago week; 20% 5 yr avg.

--Barley Progress & Conditions Mini-Recap--

Barley % Planted:  68%; 43% week ago; 52% yr ago week; 58% 5 yr avg.

Barley % Emerged:  28%; 15% week ago; 16% yr ago week; 25% 5 yr avg.

-- Export News: South Korea tenders for 55k tons of corn, non-GMO,
food-grade;  deadline Wednesday, acc. to traders

-- May USDA Supply/Demand Report released Friday Morning.

-- Argentina’s Ag Secretary signed a resolution to fully reopen the
governments Corn export registry.  Argentina had put a ban on Corn export
registrations last November. They are  expected to export  14.5 mmt. of Corn
this year.

-- Monday corn barge basis bids were 1c higher; Lack of grain in the western
corn belt has some Neb. feed lot operators saying there is a feeling that
grain may run out; California based feeders faced 5c higher corn basis bids

-- South African July White Corn was limit down today due to perceived
strength in US crop - trading at $249/ton

-- Funds aggressive sellers of Corn Monday selling 9,000 contracts. Funds
also sold 2,000 Soybeans, 1,000 Wheat, 4,000 Oil, 1,000 Meal.

-- CBOT May Corn Deliveries: 2,085

-- Dalian Corn futures finished Tuesday's session higher.

-- eCBOT Vol: 163,076; Pit Vol.: 58,860; Open Interest change: -4,955

-- Weather: Above Normal Temps. Normal Precip.

-- Outside markets. Energy ; US $ ; Gold & Silver:

Cash Markets

-- CIF Corn:  May +25 to +26, LH May +27 to +28, June +29 to +32, July +32
to +36, Aug. +37 to +39, Oct. +32 to +34.

TREND:

The liquidation continues to drive trade here. Do not see a lot of new
positions being originated. Not sure when this pattern is finished.

Domestic corn bids firmer than the export market but yet the corn spreads
lost 4 cents N to Z today. I see this as an opportunity to take on extended
coverage fro the user. You might want to look at calls because the trade is
not very predictable.



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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