Linn Group Morning Corn Comment

CHICAGO - Jun 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market ended mixed on Tuesday as it seems like we had the same type
of session that we saw on Monday.  The old crop front month was pressured by
fund rolls from the July into the September and December contract and the
back months being held up by weather concerns in the front of huge demand.
Option trade also helped push old crop futures lower as we had big selling
in calls and another firm buying puts, both bearish scenarios.  The Goldman
Roll starts tomorrow, but it seems that many funds have gotten a jump on the
roll as over 40,000 spreads traded electronically yesterday.  Volume was
moderate to heavy because of this spread action and funds were even on the
day.  Corn was higher early in the session only to drop later in the day as
traders finally decided that rain is good for corn and negative futures
prices.  Weather remains a huge factor in corn futures prices, especially as
traders are watching conflicting weather forecasts and demand remains very
strong.  No new news in the corn market and traders await the release of
export sales tomorrow morning.

eCBOT market was higher overnight on continued talk of the possibility of
hot/dry weather in the future which seems to be overriding the current
weather pattern that is bearish corn.  The corn market is not the leader
right now in the grain complex as we continue to see soybeans rally and
traders unwilling to sell the corn market.  Some traders are using the corn
as the short side of inter-commodity spreads vs. beans and wheat.  The
experienced grain trader thinks that corn is a sell today, but nobody is
willing to step out and sell the market because long term, they are bullish
corn, and any hint of weather problems could propel the corn market into new
highs.  Remember, there is a weather premium built into the corn price right
now, not a weather scare.  That may seem like semantics, but there is a big
difference because a weather scare could push the corn market higher and
never look back.  I would expect to see the corn market to open unchanged, a
little higher but the old crop to come under pressure from the spreads as we
continue to see spreading out of the July and into to the September and
December.  USDA releases export sales tomorrow morning and traders will be
watching the forecast for a better indication of hot/dry weather in coming
weeks.

eCBOT Overnight

Contract            Last      Net Change       High      Low

CN7                  382^0    1^6                   384^0    379^2

ZCU7                387^2    1^4                   389^4    384^4

ZCZ7                 385^4    2^6                   387^0    381^4

ZCH8                397^4    4^0                   397^4    393^0

Early Opening Calls:

Top News

-- Brazil's gov't June estimate of 06/07 Corn output at 50.7 mln mt down 0.4
mln mt from May's estimate

-- Mexico's ag ministry estimates 2007 Corn production 9.1% higher than year
ago.  2007 Corn production at 23.8 mln mt

-- Top fuel, farming, & policy makers will launch another study on the
future of ethanol production in the US; suggest cellulose feedstock's likely
to overtake corn; the Hale Group will manage the study, no date was set for
the release of the final study.

-- More Brazilian ethanol investment on George Soros radar, tells ethanol
conference that he plans more investment in that industry

-- Brazil ethanol conference told by ADM executive it's still looking for
the 'right' investment opportunity in Brazil

-- Goldman rolls starts Thursday.

-- Dalian Corn futures higher in overnight trade.

-- eCBOT Vol: 166,953; Pit Vol.: 62,690; Open Interest change: -8,464

-- Weather: Normal to Above Temps East, Normal to Below West. Normal to
Above Precip.

-- Outside markets. Energy complex mostly lower; Gold & Silver: both lower;
US $ mixed vs. Euro, lower vs. Yen

Cash Markets

--CIF Corn:  June +40 to +42,  July +42 to +46, LH July +45 to +48, Aug. +44
to +49, Sept. +40 to +42, Oct. +37 to +40, Nov. +37 to +40, Dec. +42 to ??

TREND:

Beneficial weather is negative to corn---just took the market a moment to
figure it out.  Locals pressing the corn spreads in anticipation of the
Goldman roll starting later this week

Beans still appear to the least risky length at this time? Oil may be
getting tired or meal is just getting started. Not sure which but the spread
looks to favor meal for a moment?



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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