Linn Group Morning Corn Comment

CHICAGO - May 11/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Good planting weather led the corn market down for another day as we had the
July 11 ¾ and the December down 9 ½.  Also, export sales were lower than
expected but there was an announcement of new sales overnight.  Volume was
on the moderate to light at less than 200,000 contracts, but funds were very
active selling over 12,000 contracts.  Many traders were positioning
themselves for the release of the USDA report this morning as traders on the
floor kept talking about a bearish report this morning.  Remember, this
report is more important to the wheat market and really the only thing the
corn market is looking at is ending stocks.  Technically, the July corn
dropped below its 200 day moving average, triggering stops and further fund
liquidation.

eCBOT market very quiet in anticipation of the release of the USDA report
this morning.  Ending stocks for 2006/2007 were above the estimate of .876
at .937.  The market will look at this as bearish for the old crop.  The
ending stocks for 2007/2008 was below the estimate of 1.023 at .947.  Many
traders were actually trading a carryout of 1.2 bil vs. the estimate of
1.023, so that make the .947 number that much more bullish.  Analysts said
the increase in the carryout number for the old crop was a decrease in
exports and the decrease in the new crop carry out was because of the
reduction of 2 ½ bu from the trend line yield.  The USDA also raised the
forecast for corn to be used in production of ethanol, but different
analysts said this increase was inline with what the market was expecting.
Weather still remains the dominate force and it remains very conducive for
planting corn and the rain forecast for next week should actually be bearish
corn for many areas because of the old adage “rain makes grain”.  There has
been a lot of corn planted the last 10 days and it needs rain to get out of
the ground with the warmer temps.  Calls this morning will be 3-5 higher
this morning with some traders wanting to call December 10 higher.  It seems
like we would find selling on a higher corn market, but remember, corn is
almost 60 cents off the highs from Sunday night with a lot of traders short
and if they get caught, we could be significantly higher.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK7                344^0    -1^6                  345^2    343^4

ZCN7                352^0    -2^4                  355^2    352^0

ZCU7                355^0    -2^4                  357^6    355^0

ZCZ7                 354^4    -2^0                  357^4    354^4

Post report Opening Calls: 3c higher

Top News

**USDA May Supply/Demand Headlines**

**US May Corn 07/08 Crop Prod: 12.460 bln bu.; 2006-07 Production 10.535

**US May Corn 06/07 Carryout: .937 bln bu. ; est. 0.88; Apr Rpt 0.877

**US May Corn 07/08 Carryout: .947 bln bu. ; est. 1.06

**World 06/07 Corn Carryout: 93.20 mmt; Apr Rpt 91.8

**May China 06/07 Corn Output: 143.0 mmt; Apr Rpt 143.0

**May S Africa 06/07 Corn Output: 6.50  mmt; Apr Rpt 6.0

**May Argentina 06/07 Corn Output: 22.0 mmt; Apr Rpt 22.0

-- IBGE:  Brazil '06/'07 Corn Production forecasted +2% higher to 51.4 mil
tons - both corn and soybean crop at record levels

-- High dry bulk freight rate costs have forced some Asian importers,
particularly Taiwan, to turn to container shipments to procure grain;  an
estimated 80% of soybeans have been shipped this way so far this year, acc.
to traders

-- ADM Statement:  14 billion gallons of ethanol do-able if gasoline blend
is bumped up to 10%;  company working to improve efficiency, explore
cellulosic ethanol

-- US lawmakers not expected to reduce ethanol import taxes anytime soon,
due to adequate supply in the US and fear of Brazilian competition, acc. to
BNP Paribas analyst

-- Dalian Corn futures higher

-- CBOT May Corn Deliveries: 715

-- eCBOT Vol: 132,741; Pit Vol.: 50,556; Open Interest change: +993

-- Weather: Normal to Above Temps. Normal to Above Precip. Most of the Corn
Belt will be dry today. Southern areas could see some scattered showers.

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

Cash Markets

-- CIF Corn:  May +22 to +24, LH May +24 to +26, June +28 to +30, July +32
to +35, Aug. +36 to +39, Oct. +33 to +34.

TREND:

The liquidation continues to drive trade here. Corn ignored better export
interest and growing margins in ethanol to take out the Mch lows in CN. Crop
report in the AM makes speculation tonight look futile. Will talk when we
see the numbers tomorrow. Trade is widely expecting a major growth in the
carryout of corn and major reduction in the carry out of beans in the first
S&D for new crop.

The only real survey driven crop report is wheat and cotton production. Look
for the surprise in these items?



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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