Linn Group Morning Corn Comment

CHICAGO - May 9/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was pounded again yesterday as we saw most traders selling
corn as the weather remains dry and it seems the estimated number of acres
planted are going to get planted.  July closed 15 ½ lower and the December
closed 16 ¾ lower, almost reaching limit down.  Volume was moderate to heavy
and the funds were very active, estimated at 15,000 contracts sold.  Traders
said that end users were buyers of the near term contracts as they try and
cover their needs that were left unprotected this winter when prices were
very high levels.  The release of the USDA crop report on Monday night was a
big jump and with the dry weather this week in most planting areas, traders
feel we are going to have another big jump this week and the corn planted
numbers will be right back up with the 5yr average.  The weather has been
the story the last couple of weeks and that continues to be the case today.
Export activity overnight had So. Korea seeking optional-origin corn and
Argentina has partially opened its export registry, which will probably
direct some exports away from the US.  Spread trade is still very active.

eCBOT market was a little higher overnight as we have seen the corn market
break almost 40 cents from the highs on Sunday night.  No real news
overnight as the market turns its attention to the USDA supply/demand/stocks
report and the Crop Progress report to be released on Monday.  Stats Canada
released their stocks report this morning, see the details below, but stocks
were down app. 4.0% from last year.  In talking to different traders, it
seems to be a foregone conclusion that the estimated corn acres will get
planted and it would be a surprise if that doesn’t happen.  Many traders are
confident that corn planting will be up to the 5yr average by Monday.  The
volatility in corn has eaten up many of the small traders as most traders
don’t have the equity to withstand 20-30 cent daily ranges.  I am still
careful trying to find a bottom in the corn market as it will be difficult
to rally corn unless unexpected rain is added to the current forecast.  We
should see a technical bounce and we will see some short covering in front
of the USDA report on Friday before the opening, but I would also expect to
see selling if corn starts to rally.  If you are looking for limited
liability, look at trading the June corn options instead of futures.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                355^6    2^0                   356^0    354^6

ZCN7                366^2    2^6                   366^6    364^4

ZCU7                368^0    2^4                   368^0    366^0

ZCZ7                 368^4    2^0                   368^6    366^2

Early Opening Calls: 2-3 higher

Top News

**Stats Canada Oats March 31 Grain stocks: 1.48 mmt; expected 1.5 mmt

**Stats Canada Barley March 31 Grain stocks: 4.55 mmt; expected 5.5 mmt

-- Export News: South Korea bought 55,000 mt. opt. org. Corn for Aug.

-- UN agrees biofuels will reduce global warming and help rural areas, but
may negatively affect urban poor and the environment as a whole

-- EIA sees summer national retail gasoline prices average peaking at
$3.01/gal in May, then again in August

-- EIA says growing global demand, lack of refining supply, will cause Nat’l
retail gasoline prices to average $2.95/gal over the summer driving months,
that's up from $2.84/gal prior estimate

-- Chinese construct a power plant that uses corn stalk biomass as its
primary feedstock; estimates cite the plant will use 300k tons of the waste
each year and will generate 300 mil KW of electricity, acc. to a
construction company statement

-- Pacific freight rates down so far on the week, but an expected
post-holiday buying spree from China/India could end up lifting rates, acc.
to ship brokers

-- Dalian Corn futures higher overnight

-- Funds even more aggressive sellers of Corn Tuesday selling 15,000
contracts.

-- eCBOT Vol: 181,802; Pit Vol.: 75,132; Open Interest change: +1,943

-- CBOT May Corn Deliveries: 2168

-- Private forecaster predicts Atlantic Basin will experience 13-14
hurricanes; also expect 6 or 7 tropical storms will strike US coastline this
season, Gulf Coast at most risk, Accuweather.com predicts.

-- Colorado meteorologists predict an "above average" probability of a
significant hurricane landfall on US Gulf Coast

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

Cash Markets

CIF Corn:  May +25 to +26, LH May +26 to +29, June +29 to +32, July +33 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 but feel
we are getting close in corn at this trade today. Look to come away from
short hedges on this break. If you have not sold puts against those shorts
on the last break, do it now.

Earlier today you should have received a recommendation to buy corn and sell
wheat.

Domestic corn bids continue firm and there should be more export trade
develop on these lower cash values. The corn/bean spreads have moved so
sharply this week that it may be a good way to fade the corn break. Buy 2 CZ
vs. selling 1 SX. Use a trade over 42 to abandon the trade.



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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