Linn Group Morning Corn Comment

CHICAGO - May 10/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was mixed yesterday as we had pressure on the December
contract from improved planting conditions and buying the nearby contracts
because of firming cash markets.  We had the July close up 2 ¾ and the
December down ½.  Volume was light as many traders said it was almost like a
holiday trade.  Traders talk about the volatility chasing some traders out
of the corn market and the volatility may just be getting started with the
summer approaching.  Spreading also led the corn market higher as we had
bull spreading in the corn and we had traders buying beans and selling corn,
mostly in new crop.  Funds were net buyers of app. 2,000 contracts.  Traders
also talked about squaring or at least lightening their positions in front
of the USDA report that will be released tomorrow before the opening.  The
only real number tomorrow morning is the stocks number as the numbers
generated for new crop production are computer generated and based on
planting intentions and trend line yields.

eCBOT market closed slightly higher overnight after being up 3 cents earlier
in the session.  Market seems to be digesting the volatility and the release
of the USDA report tomorrow morning, but traders don’t really look for any
surprises tomorrow, at least not in the corn market.  Export sales were a
little lower than expected.  Traders were estimating 600,000 to 800,000 and
actual sales were 524,000.  This is the second week in a row we had lower
than expected sales, but there was positive news in the export market as
private exporters reported the sale of 550,000 tones to So. Korea and
284,000 tones to Japan.  Cheaper freight rates out of the US is making corn
exporter from the US cheaper than corn out of So. America.  One trader said
that these sales to So. Korea and Japan are further indications that China
will not be exporting corn this year.  There has been talk that China was
going to export corn, but these recent sales for this year and next year may
put those rumors to rest for awhile.  We look for the corn market to open
higher today and have trouble if it gets 5-7 higher.  The export
announcements this morning should give strength to the market and there
should be some continued short covering.  Rain was added for the beginning
of next week covering almost the entire corn belt, but with just about
everybody planting corn this week, I don’t know how much of an affect this
will have on the market.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                357^6    0^4       360^0    357^6

ZCN7                366^4    0^2       369^4    366^2

ZCU7                368^2    1^6       371^4    368^0

ZCZ7                 367^0    1^0       370^2    366^2

Early Opening Calls: steady to 2c higher

Top News

**FOMC keeps Fed Fund Target Rate Unchanged at 5.25%; FOMC votes unanimously
for leaving Fed Funds target rate unchanged.

**USDA May 10th Weekly Corn 06/07 Export Sales Net: 524k mmt, expected =
600-800k

**USDA Corn 07/08 Export Sales Net: 19,300 mt

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

-- Export News: South Korea tendering for 23,800 mt. US Wheat for July.

-- European Union Corn Production for 07/08 forecasted at 55.3 mil tons,
previous = 54.3 mil tons, acc. to USDA attaché

-- 157,000 mt of import licenses were granted for Barley by the Moroccan
ONICL for delivery by July 31, this covers only a portion of the 300,000
announced Apr 20, but previous press reports have officials suggesting up to
500,000 T of barley could be imported

-- Morocco ONCIL seeks import of 60,000 T of soft milling wheat at upcoming
tender May 18, acc to state agency. This comes on the heel of an interview
the manager of a Moroccan mill group said to make up for low domestic
production, Morocco will import up to 3 mln mt of wheat in 07/08

-- Dalian Corn futures higher

-- CBOT May Corn Deliveries: 1448

-- eCBOT Vol: 135,408; Pit Vol.: 55,274; Open Interest change: +881

-- Weather: Above Normal Temps. Normal to Above Precip. The Corn Belt will
see some scattered showers

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

Cash Markets

-- CIF Corn:  May +22 to +25, LH May +25 to +26, June +29 to +30, July +33
to +35, Aug. +36 to +39, Oct. +32 to +34.

TREND:

The liquidation continues to drive trade here. Look for export sales to be a
non-event in the AM

Trade should slow down awaiting the winter wheat production and new crop
S&D’s on Fri AM.

Still like the corn/bean trade. Corn/wheat should also continue to be of
interest but may be influenced by the production est on Fri AM.



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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