Linn Group Morning Corn Comment

CHICAGO - Jun 13/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed a little lower on Tuesday as traders took some profit
after Monday’s rally and the weather forecasts started to bring some
cooler/wetter weather into the market next week.  The July contract closed 2
½ lower and the December closed ½ lower.  Many traders were looking for a
lower day after Monday’s rally and the corn wasn’t able to follow wheat
higher.  Corn also seemed to come under pressure as the weak leg of
wheat/corn spreading which has been a popular trade.  The spread actually
reversed later in the day as traders bot corn and sold wheat.  The eastern
corn belt is still dry, but some weather models are bringing rain into the
dry areas later in the weekend and the beginning of next week, but other
models have the ridge staying put into the future.  Volume was very heavy as
spread trade remained very active with the Goldman Roll ending today.  Even
with the lower closes, funds were slight net buyers at the end of the day.
The dry weather is keeping the corn market higher even as the rain forecast
puts on the pressure.  The eastern corn belt is dry and stressed, but it is
still very early to say that any yield potential has been permanently
damaged.  The bottom line is that corn needs a drink, but there is no damage
that can’t be corrected before pollination.  So. Korea announced that they
bot 50,000 tones of corn from China with traders saying the deal was struck
last Friday.

eCBOT market overnight was lower as traders look at the new 6-10 day
forecast showing cooler/wetter weather.  The futures price of corn has been
pushed higher over the last couple of sessions on the hot/dry weather in the
eastern corn belt, so any forecast that brings rain into the picture will
push prices lower.  Outside markets also pressuring the corn market as beans
were down 10 cents and bean oil was down 70 pts overnight as the palm oil
market was much lower overseas.  Traders are very nervous about the corn
market because the forecast will put some pressure on the market, but it
will probably take actual rain showers to push it a lot lower.  The demand
for corn is still very strong so traders will be hesitant to sell corn very
hard until the eastern corn belt gets rain.  Look for the market to open
lower today and then wait for the next weather forecast.  It seems very
early for the market to trade weather, but this isn’t a normal year for corn
as there has been a record number of corn acres planted and very little room
for error in ending stocks.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                389^4    -4^0                  395^2    389^4

ZCU7                398^0    -4^4                  403^6    398^0

ZCZ7                 401^2    -4^2                  407^2    401^2

ZCH8                411^0    -4^0                  416^0    410^6

Early Opening Calls: 3 to 5c lower

Top News

-- Mexico's Ag ministry sees corn production rising 10 mln mt over the next
5 yrs to 30 mln mt from current corn output of 20 mln mt

-- Higher Corn prices & lower petrol prices in 2nd half of 2007 concern
Raymond James' stock analyst into downgrading 4 ethanol based stocks from
outperform to strong buy, acc. to marketwatch website article

-- German biodiesel industry still only operating at half strength;
contractors reportedly refusing to sign long-term deals with manufacturers
as lack of profitability begins to take its toll, acc. to a German biodiesel
trade group

-- Dalian Corn futures lower.

-- Funds Sold 3,000 Soybeans, 500 Meal. Fund ended even in Corn and Oil.--
eCBOT Vol: 224,022; Pit Vol.: 100,138; Open Interest change: +624

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

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

Cash Markets

--CIF Corn:  June +29 to +30,  July +35 to +36, LH July +36 to +42, Aug. +??
to +42, Sept. +?? to +40, Oct. +37 to +40, Nov. +38 to +40, Dec. +42 to ??

TREND:

The index fund roll got much heavier today affecting the closes in all Jly
contracts. The market will expect to see one more heavy day tomorrow before
it starts to slow. Cash corn for barges remains very weak and a long way
below delivery. Ethanol margins have weakened this month and the ethanol
plant no longer has the buying power that we saw in Apr and May.



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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