Linn Group Morning Corn Comment

CHICAGO - Jun 14/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market moved higher on Wednesday on the back of the wheat market
and further concerns in the eastern corn belt that the rain isn't going to
come later this weekend and into the beginning of next week.  The wheat
market surged ahead by the limit of 30 cents again yesterday and corn
followed.  Different traders point to the difference in the corn/wheat
prices and say that difference can only get so big before substitution will
close the gap in prices.  Weather remains the focus for corn as traders are
now starting to say they want to see actual rains, not just forecasts for
rain.  So far in the growing season, the damage to corn is more superficial
than real, but it still has the market on edge because of the huge demand
for corn.  Crude oil futures were higher, helping push the corn market.
Volume was very heavy on the last day of the Goldman Roll and we also saw
some bull spreading, July/Sept, as well as heavy option activity in front of
the July expiration next Friday.  Funds were very active buying close to
12-15,000 contracts by the end of the day.  Weather remains the main focus
for the corn market and conflicting, ever changing forecasts are making it
just that more difficult.

eCBOT market was higher overnight as the wheat continued higher and some
weather models pushed the rain back from early next week to middle/later in
the week.  Traders are constantly monitoring the weather forecasts, actually
losing sleep because some forecasters are releasing new forecasts around 4am
CST before the close of the overnight markets.  Export sales this morning
were in line with expectations.  Trade estimates were 400,000 - 600,000 and
the actual weekly sales were 531,900.  Export sales used to move the corn
market on Thursday mornings and were eagerly anticipated, but now, these
will be forgotten at 9:31 CST.  Weather is the game in town today and it
will be the main thing traders watch until the eastern corn belt gets rain,
and it will get rain.  China announced it was taking steps to restrict the
corn processing industry to help stem the Ag-flation they have been
experiencing by placing taxes on corn processing products and scrapping tax
rebates on ethanol exports.  This prompted cash traders to say China will
not release any new export quotas.  Traders look for the market to open in
line with last nights close and then look for direction.  Wheat is still the
leader and if keeps going higher, corn will follow.  Traders will be looking
for the mid-day weather forecasts to see if there is any changes.  Tomorrow
could be a very interesting day going into the weekend and no change in the
weather forecast?

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                410^4    6^0                   410^6    403^2

ZCU7                418^0    5^4                   418^0    411^0

ZCZ7                 420^0    5^0                   420^4    413^2

ZCH8                430^0    4^6                   430^0    421^4

Early Opening Calls: 5 to 6c higher

Top News

**USDA Corn 06/07 Export Sales Net: 531,900 mt; 07/08 Export Sales Net:
54,800 mt; expected 300,000-550,000 mln

-- Nonghyup Feed Inc., of South Korea, purchased 57,000 tons at of Chinese
corn at $224/ton from a trading house, according to traders

-- Goldman Roll wrapping up as both Fortis and Fimat bought Sep and sold
July 2,000 times apiece.

-- Brazil to hike ethanol blend requirements +2% by July 1st 2007 to 25%
total, acc. to ag ministry statement

-- VeraSun CFO:  Does not see ethanol production growing at 1 billion
gallons per quarter, concedes there may be occasional oversupply but these
will be swallowed up by expanding demand, acc. to a statement

-- Ag Sec Johann announced Japan will move from 100% re-inspection of US
beef imports to a statistical sample-based protocol for future inspections

-- Ag Sec Johann announced Malaysia agrees to use OIE guidelines to allow
import of bone-in beef and cuts from all ages of cattle

-- Dalian Corn futures higher overnight.

-- Funds very aggressive after Corn Wednesday buying 9,000 Corn.

-- eCBOT Vol: 260,870; Pit Vol.: 118,121; Open Interest change: +12,433

-- Weather: Normal Temps. Normal Precip. The western Corn Belt will see
showers and thunderstorms today and Friday

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

Cash Markets

--CIF Corn:  June +33 to +36,  July +38 to +39, LH July +40 to +42, Aug. +37
to +42, Sept. +36 to +41, Oct. +37 to +40, Nov. +38 to +41, Dec. +43 to ??

TREND:

The index fund roll was not as heavy today and the buying in front month
corn overcame that negative influence. Cash firming but not enough to make
the delivery mechanism work for export and the design makes in unlikely this
is used for originations for domestic guys. That means, for the Jly contract
to make a concerted charge back, it has to be on the back of a real weather
concern. For now the concern is more superficial than real.  The SE is the
problem area with dry concerns now stretching into Ill and Ind but rains
early next week will be timely if they appear as advertised. If they are
gone in the Sun maps, corn could repeat the performance that started the
rally this week.

Corn has created a base so that technical appearance is stronger---however
CZ is back against the contract highs and my bias is to bring back some
farmer hedges that were covered at lower levels. If you do---be sure to pay
attention if we make new highs because corn could act like wheat has in that
situation



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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