Linn Group Morning Soybean Comment

CHICAGO - May 16/07 - SNS -- Following is the morning soybean futures comment from the futures commission brokerage firm Linn Group.

July Soybeans ended stronger on Tuesday up 7 ½ cents. Since last Thursday’s
close July beans have gained 31 ¾ cents after gapping higher on Friday. At
the forefront of the rally is the idea that a worsening drought in portions
of China and potential dryness due to La Nina conditions in the US could
harm crops. China’s Xinhau news agency said on Tuesday that rainfall in
China’s key Henan province since March has been down 70% on average for the
last 2 years and no significant rain forecast for that region for the next
month. Traders say much of the rally is being attributed to weather. Over
the past three sessions funds have bought an estimated 25,000 contracts of
soybeans.  Volume estimates for Tuesday show 99,443 soybean futures traded,
32,625 meal and 32,742 oil. Funds bought an estimated 9,000 soybeans, 1,500
Oil and 1,000 meal.

Traders say they are watching the soaring value of Brazilian real which has
been supportive for soybean futures because of increased competitiveness of
U.S. soy stocks. Earlier today Brazil's real gained 1.1 percent to the
strongest since January 2001 relative to the dollar. The real rallied 1
percent on Tuesday on increased investment flows. USDA early Wednesday said
U.S. exporters reported a sale of 2,092,000 mt. of U.S. soybean to China for
2007/08. Overnight Chinese soybeans and meal closed higher. Malaysian Palm
oil futures closed higher.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZSN7                781^2    3^2                   783^0    777^2

ZSQ7                788^6    4^4                   788^6    784^0

ZSU7                796^2    4^6                   797^2    792^2

ZSX7                 810^4    3^4                   812^0    806^4

ZSF8                820^0    4^4                   820^0    818^0

ZMN7                209.4    1.2                    209.9    208.0

ZMQ7               212.4    2.0                    212.4    211.3

ZMU7                214.1    1.5                    214.1    212.6

ZLN7                 34.61    0.01                  34.78    34.56

ZLQ7                34.99    0.15                  34.99    34.99

ZLU7                 35.10

Early Opening Calls: higher 3 to 4c for beans meal is called .50c higher and
Oil is called .10 to .15 cents higher.

Top News

-- Argentina's wheat planting for 07/08 is underway, according to gov
statistics;  acreage estimated at 13.6 mil acres;  this is considerably more
than USDA/BAGE estimates

-- India April edible oil imports totaled 306,245 T vs March imports of
317,930 T

- Bulk freight rates again reach record highs:  +6% this week;  rates likely
to stay fairly firm due to strong continued demand, acc. to brokers

-- Brazil President says to become reliable ethanol supplier to world
markets, his country should build a stock pile of ethanol

-- Iowa State University publishes report insisting celluslosic ethanol not
viable economically

-- Despite rising gasoline prices, White House says there are no plans to
access Strategic Petroleum Reserves to lower pump prices.  This come just a
day after the head of the EIA says the gov't will wait until after the
summer driving season to fill the SPR.

-- Merrill Lynch commodity analyst sees high commodity prices lasting
another 5 to 10 years, believes agriculture prices at just the beginning of
a cycle of higher prices.  Also sees petroleum prices taking off next year.
A managing director of Merrill also sees base metals prices continuing at
higher prices into the future

-- Dalian Soybean futures higher; soymeal & soyoil sharply higher overnight
following CBOT's lead Tuesday & overnight.

-- Malaysian Palm oil futures continued their uptrend after Tuesday's profit
taking.

-- eCBOT Vol. 61,008; Pit Vol. 39,505; Open Interest Change: +5,999

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

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

May      +3/6 N             +29/30 N             +6/?? N           +60/ N
225



To discuss this report further or for specific trade ideas please contact me
directly

Nathan T. Smith III
Linn Group
nsmith@linngroup.com
toll free: (877) 787-6278
local: (312) 896-2090
fax: (312) 896-2050
www.linngroup.com/

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