Linn Group Morning Corn Comment

CHICAGO - Jun 7/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market continued to set back on Wednesday as the market tried to
break out, but couldn’t and failed with the help of bear spreading.  Spreads
still the main topic of conversation in the grain pit as traders sell July
and buy September and December in front the Goldman Roll that starts today.
That spread has moved almost 10 cents in the last 3 days.  The deferred
contracts remained strong as the world is worried about a problem with the
US corn crop.  Wheat also contributed to the corn decline as wheat traded up
against its highs again and failed.  This profit taking in the wheat and
beans helped push corn lower as there is no new news and corn is following
the other markets.  Weather remains a mixed bag as current conditions are
excellent for corn growth, but forecasters are still looking for a chance of
hot/dry weather a couple of weeks out if the magical high pressure ridge
develops.  Dry areas in the eastern corn belt is helping keep corn on edge
and helping prop up the prices.  Demand remains strong, so the market is
dependent on a huge US corn crop.  Option activity remains brisk as traders
liquidate their positions in front of expiration in 2 weeks thus reducing
volatility.  Volume was moderate to heavy and funds were net sellers of over
5,000 contracts by the end of the day.

eCBOT market closed lower overnight after being higher most of the night
session selling off in the last 2 hours.  The July contract was up over 4
cents only to close down 1 ¼ and the December closed ¾ lower.  Export sales
this morning were not very strong compared to recent weeks.  The trades
estimate was 600,000 to 1 million and actual sales were app. 575,000.  We
didn’t really hear about any big sales this week, so we didn’t expect the
sales to be very big, but still the numbers this morning will be looked at
as negative the corn market.  See below for actual sales details.  Nothing
has really changed in the corn market, current conditions are bearish
futures, but the prospect of hot/dry weather in the middle of the growing
season keeps the corn market from breaking down.  Spread activity will
dominate trade with funds rolling their longs from July into September and
December, but some traders feel the Goldman Roll may be anticlimactic as the
spreads have weakened over the last couple of days.  Calls this morning for
the corn market will be lower and wouldn’t be surprised if the market tries
to press corn lower, especially with the bear spread activity.  Weather
forecasters are on both sides of the hot/dry ridge forecast 11-15 days out,
so the market is going to be volatile.  Market starts to eye the release of
the USDA Crop Report on Monday morning.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                373^4    -1^2                  379^4    373^4

ZCU7                380^4    -1^0                  385^6    380^2

ZCZ7                 380^4    -0^6                  385^6    380^4

ZCH8                395^6    3^6                   396^4    393^0

Early Opening Calls: 2 to 3c lower

Top News

**USDA Corn 06/07 Export Sales Net: 375,800 mt; 07/08 Export Sales Net:
193,400 mt; expected 800,000 - 900,000 mln

-- Goldman Sach Index roll begins today. Index funds were seen making some
early rolls to Sept as Fimat, Fortis and JP Morgan each bought a few hundred
Sept while selling July.

-- ISU meteorologist Elwynn Taylor estimates a 50/50 chance of a 154 bpa
yield for the 2007 US corn crop

-- ISU's Taylor:  30% chance of a record high yield in 2007 (163 bpa+), 20%
chance of drought (133 bpa), 59% chance of exceeding trend-line yields

-- To offset increased price of grain and energy, General Mills will raise
prices slightly on cereal, according to a spokesman.

-- UK farmers and buyers are having to adjust their business to a new
environment due to the rising global prices for farm commodities, according
to an agricultural economist.

-- US effort to reduce dependence on foreign oil by emphasizing ethanol
production may be misguided, according to head of Alaron USA.

-- Dalian Corn futures lower overnight

-- Funds on the day closed net sellers of an estimated 6,000 CBOT Corn
contracts.

-- eCBOT Vol: 163,382; Pit Vol.: 79,947; Open Interest change: -14,306

-- Weather Above Normal Temps. Normal to Above Precip.  Scattered showers
and thunderstorms will move west to east today into Friday.

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

Cash Markets

--CIF Corn:  June +?? to +40,  July +40 to +43, LH July +42 to +46, Aug. +42
to +46, Sept. +?? to +40, Oct. +37 to +41, Nov. +38 to +42, Dec. +40 to ??

TREND:

With the roll starting tomorrow, corn spreads should be at their widest
either Tuesday or Wednesday next week. At that point we feel is a good time
to take on this spread again. A quick look at the July/Dec spreads shows the
current barge basis around 21 under for July.



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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