Linn Group Morning Corn Comment

CHICAGO - May 17/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn trade yesterday ended mixed as bull spreading led the July corn 4 ½
higher and the December corn 1 lower on the day.  Traders on the floor said
that locals and some historical commercial firms were buying the July and
September and selling the December.  There was over 50,000 spreads done on
the eCBOT system and probably close to 20,000 done on the exchange floor.
Soybeans also helped push the corn market higher as we saw beans up almost
20 cents earlier in the day and closing 15 cents higher.  Corn is actively
being planted and traders we have talked to consider the corn crop getting
planted as a foregone conclusion now and until we have any sort of weather
event, this will keep pressure on the new crop corn futures.  Volume was
moderate to heavy with much of that volume coming from spread trade,
probably a lot of liquidation of bear spreads.  Funds were pretty quiet in
the corn buying only 2-3,000 contracts on the day.  Weather will now remain
the forecast for the corn market because now that the corn is pretty much in
the ground, it still needs to grow and yield well to keep up with demand.
Currency markets are having their affect on the grain markets as the
Brazilian Real is rising making US grains cheaper to the international
customer.

eCBOT market was lower overnight as we saw the liquidation of the bear
spreads in corn continue from yesterday’s action.  Export sales released
this morning were at the high end of the estimate range, over 3 times bigger
than last week and about double the prior 4-week average.  Traders estimated
weekly export sales of 1.1 to 1.3 mil and actual sales were 1.513 mil.  As
we said last week, we expected sales to be strong as there was bigger sales
announcements the end of last week.  A well read grain analyst, Informa,
will release their acreage estimate later this morning after the opening.
Their last estimate was 87.8 mil acres vs. USDA estimate of 90.3 mil acres
and traders are saying they expect this number to be a little lower.  Based
on last nights action, it looks like the spreads are going to dominate trade
again today.  There is no real new news in the corn market and weather
remains a driving force, but probably not as important this time of the
year.  Traders look for the corn market to open lower in line with last
nights close even with the big export sales.  Soybean was the leader
yesterday and probably kept the corn market higher on the day in the July.
Look for corn to be a follower in the grain complex in the near term.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                374^0    -2^0                  378^4    373^2

ZCU7                374^0    -3^4                  378^2    374^0

ZCZ7                 374^0    -3^4                  378^4    373^2

ZCH8                384^4    -4^2                  389^0    384^4

Early Opening Calls: 3 to 4c lower

Top News

**USDA Corn 06/07 Export Sales Net: 1.513 mt; expected 1.1 - 1.3 mln

**USDA Corn 07/08 Export Sales Net: 347,900 mt

-- 60,000 T tender of US or S Amer corn by Taiwan passed.

-- 80,000 T tender of Opt origin corn by Philippines passed.

-- Informa releases its planting estimates for soybeans & corn today at
10:30 AM CT.

-- EU total grain crop estimated at 279.6 mln mt, down 5.0 mln mt from
Strategie Grains April estimate.  Despite the reduction, the latest figure
is still 7% higher than 2006

-- EU May corn crop estimated at 56.9 mln mt, down 540,000 mt from Strategie
Grains April estimate.

-- Export News:  Jordan completes 100k ton feed barley tender purchase;
$259.50/ton from Euro/Russian sources, acc. to traders

-- Argentine government holds corn production estimates steady for 06/07 at
22 mil tons

-- Japanese press reports that country's Ag minister will NOT automatically
eliminate a cattle age limit on US beef imports to Japan based on OIE
decision

-- UN Food & Ag expects 2007 global coarse grain production at 1.051 bln T a
rise of 7.1% from prior period.

-- Some traders are starting to begin to track the La Nina pattern forecasts
and getting yields needed.  More talk of dry Chinese crop areas could affect
corn acres.

-- US delegation that includes US Treas Sec Paulson & Fed Chmn Bernanke will
meet next week in China for round 2 of economic discussion.  USDA Ag Sec
Johanns will also be part of the group.

-- eCBOT Vol: 168,002; Pit Vol.: 44,443; Open Interest change: -1,343

-- Weather: Normal to Above Temps. Normal to Above Precip.

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

Cash Markets

-- CIF Corn:  May +31 to +??, LH May +32 to +34, June +34 to +35, July +39
to +40, Aug. +39 to +41, Oct. +34 to +36.



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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