Linn Group Morning Corn Comment

CHICAGO - Jun 5/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed mixed on Monday as we saw more pressure on the old
crop with the July down 3 ½ cents and the December unchanged.  The pressure
in the old crop came from continued bear spreading as traders covered bull
spreads and funds continue to roll their positions into the December and
September contracts in front of the Goldman Roll that should start on
Thursday.  Some late call selling by funds covering positions also
contributed to the pressure in the July contract.  As one trader said, there
is no new news in the corn market and we are at the top of the range.
Volume was light to moderate and funds were even at the end of the day.  The
weather pattern looks good for most of the corn belt, but traders continue
to point to funds and large speculators as helping prop up the corn as they
buy futures in anticipation of another weather scare.  Because of the huge
demand for corn, any weather scare is likely to produce a jump in futures
prices.  Technically, the corn market looks overbought and rain the last
couple of days have prevented corn from extending out of its current trading
range.

eCBOT market was higher overnight in the face of good weather conditions and
78% good/excellent ratings(see complete USDA report below) as we saw both
the July and December contracts 3 cents higher overnight.  As one trader
said this morning, it is hard for an experienced grain trader to not be
negative the corn market with the crop in the ground, rains on Jun 3rd, and
the forecast for continued rains over the next 10-15 days.  For the second
week in a row, we saw a high good/excellent rating in corn, close to its
highest rating ever for this date.  Wheat and beans seem to be the leaders
in the grain complex as they both rallied yesterday, but couldn’t hold the
highs.  The corn bulls will continue to talk about a possible ridge building
later in the summer and the rally in soybeans is helping to lend support.
Funds continue to be there to buy corn because the demand is very strong and
they don’t want to be left behind if the corn market takes off.  Remember,
when the market can’t break when we get bearish news, be careful.  The
opposite happened a couple of weeks ago when the market was getting bullish
news, but kept breaking down.  Beans will be the leader this morning and
corn could follow it higher, but corn will also be on the sell side of
inter-commodity spreads.  Corn bears are selling into these rallies and if
the corn doesn’t break, they could get caught short, adding to the buying
power of an already strong corn market.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                386^6    3^0                   387^2    384^0

ZCU7                390^0    1^6                   391^0    388^0

ZCZ7                 386^4    3^4                   386^4    382^6

ZCH8                396^0    2^2                   396^0    393^4

Early Opening Calls: 2-3 higher

Top News

Corn Progress & Conditions Mini-Recap

-------------------------------------

Corn % Emerged:  94%; 85% week ago; 93% yr ago week; 88% 5 yr avg.

Corn Crop Conditions Latest: VP= 1; P= 3; F= 18; G= 60; EX= 18

Corn Crop Conditions Prior Wk: VP= 1; P= 3; F= 18; G= 60; EX= 18

Corn Crop Conditions Yr Ago Wk: VP= 1; P= 4; F= 24; G= 56; EX= 15

-- Analysts were expecting corn to show a rating up or down a couple of
points from last weeks 78% good to excellent reading, but was unchanged at
78%

-- USDA released the 06/07 corn inspections at 37.242 mil. bu, which was
below the streets estimates of 39 - 44.  There was little reaction to these
numbers.

-- Petrobras President says US tariff on imports restricts the growth of
ethanol production in Latin America at a meeting of executives.

-- Spain's Ag ministry issues 07/08 winter grain production estimate at 17.1
mln mt, up 14% from last years drought reduced crop

-- Corn planted acreage in Spain expected at 365,700 ha, up 12,100 ha from
last year's crop, Spanish Ag ministry says

-- Goldman roll starts Thursday.

-- Barge freight was steady on Monday

-- BN rail freight steady

-- Dalian Corn futures slightly higher overnight

-- eCBOT Vol: 109,489; Pit Vol.: 44,038; Open Interest change: -1,005

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

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

Cash Markets

--CIF Corn:  June +?? to +46,  July +44 to +48, Aug. +45 to +50, Sept. +41
to +44, Oct. +38 to +40, Nov. +38 to +40, Dec. +42 to ??

TREND:

Beneficial weather should have been negative to corn. Spread trade may have
been part of the support. Liquidation of corn/wheat spreads into new highs
also responsible for corn strength. This trade needs to be faded.

Corn price action somewhat unpredictable --- spreads expected to widen this
week but flat price seems to have a mind of its own. Watch out---this market
could play catch up to the down side at any time



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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