Linn Group Morning Corn Comment

CHICAGO - Jun 11/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off on Friday on the back of the sell off in soybeans
and the forecast for rains across the corn belt.  The July contract closed
almost 3 lower and the December was 1 ¼ lower, both well off their lows.
Weather remains the main focus for traders as even though the crop was
planted on time and so far it has had excellent growing conditions, the
world is dependent on a good crop.  Weather models were in agreement on
Friday calling for a better chance of rain in the eastern Midwest over the
next 6-10 days.  There is no new news for the corn market, so traders will
focus their attention to weather.  Volume was very strong as we continue to
see a lot of spreading of the July vs. the September and December.  Most
traders said they didn’t expect much out of the USDA report to be released
before the opening on Monday and also they expected little change on the
crop condition report that is released after the close on Monday.  Volume
was pretty heavy compared to the last couple of weeks and funds were net
sellers of app. 2,000 contracts.  Corn found some sell stops, but seems to
find buying on any attempt to sell the market, even in the face of bearish
news.

eCBOT market started sharply higher on Sunday night as the weather forecast
changed to show the ridge back across the eastern corn belt taking out the
chance for rain most of this week from Illinois to Ohio.  This forecast was
different than Friday when the consensus seemed to be that the ridge would
not develop.  The USDA released its production and supply/demand report this
morning and it was neutral to slightly bearish the corn market, but it will
be overridden by the weather forecasts.  The June 07/08 carryout was
estimated to be .990 bln bu. and the actual carry out was .997, well within
the range of the estimates, but slightly above the average estimate.
Traders have looked right past the USDA report and once again will continue
to focus on the weather picture.  Traders I have talked to this morning
think we could see corn 15-20 higher today, but don’t know if we can hold
those highs.  Last night and today is probably just the beginning of the
type of markets we are going to see this summer as traders will get very
nervous about hurting the US corn crop and will be afraid to sell the corn
market on bearish news.  Today should be a very interesting day and the
volatility should be very strong as traders watch the weather forecasts and
decide who is to be believed.  Nobody wants to be short the corn market.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                392^4    10^4                  400^2    389^4

ZCU7                399^4    9^2                   408^0    397^4

ZCZ7                 401^0    8^6                   409^6    398^6

ZCH8                412^0    9^0                   420^0    409^2

Early Opening Calls: 10 to 12c higher post report, drier weather outlook
presses market higher

==USDA June Supply/Demand==

**US June Corn 07/08 Carryout: 0.997 bln bu.; est. 0.99; May Rpt 0.947

**June Argentina 07/08 Corn Output:24.0  mmt; May Rpt 24.0

**June S Africa 07/08 Corn Output:10.5  mmt; May Rpt 10.5

**June China 07/08 Corn Output:146.0  mmt; May Rpt 146.0

Top News

-- USDA weekly crop progress released today at 3:00 pm CDT

-- Chinese state press agency reports the central gov't might shift corn
based ethanol plants feedstocks to alternative raw material like cassava

-- China announced it's May trade surplus was $22.45 billion, up 73%

-- 25,000 mt of various origin rice bought by Japan at buy sell auction
system.  China & US were the main suppliers chosen at the auction.

-- Commitment of Traders report with options as of June 5 shows Funds: Corn
Long 190,288 up 44,759

-- Dalian Corn futures Sept contract settled lower overnight.

-- eCBOT Vol: 176,231; Pit Vol.: 82,526; Open Interest change: -3,116

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

-- Outside markets. Energy complex higher; Gold $5 higher & Silver higher;
US $ higher vs. Yen & Euro.

Cash Markets

-- CIF Corn:  June +36 to +38,  July +42 to +43, LH July +44 to +46, Aug.
+40 to +44, Sept. +37 to +42, Oct. +37 to +40, Nov. +37 to +41, Dec. +42 to
??



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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