Linn Group Morning Corn Comment

CHICAGO - Jun 15/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

There was nothing new in the corn market as it moved to fresh 3 month highs
on the continued hot/dry weather, the lack of rain in the forecast, and the
surging wheat market.  Wheat was up almost the limit again on Thursday, but
closed 12 cents off its highs, but still 17 cents higher.  The weather
forecast remains the same with some models calling for rain and some pushing
back the possibility of rain until later next week.  The market needs a
large US corn crop and traders will be very nervous about any potential harm
to the corn crop.  It is still early, but as one trader said, if we don’t
get rain in the dry areas of the eastern corn belt by Thursday next week,
traders will start talking about a reduction in yields for IL, IN, and OH.
Volume was very large again yesterday with the spread volume helping pump up
those numbers.  Funds were very aggressive after corn again buying 10,000+
contracts by the end of the day.  Cash traders are still talking about China
putting restrictions on the corn processing industry to limit corn usage in
those industries.

eCBOT market was higher overnight on the back of spread liquidation and no
change in the weather forecast showing the lack of rain.  The July contract
closed 5 ½ higher and the December closed ¾ higher.  This is most likely
spread liquidation as many traders were playing the Goldman Roll and were
long the December and short the July contract and now are liquidating.
Also, many traders have been long Chicago wheat and short corn and last
night we saw more liquidation of that spread as the July corn was 5+ higher
and the July wheat was 3 ½ lower.  The weather forecast remains the main
focus of the corn market as traders are searching for any information and
comparing all the different models and trying to decide who to believe.  My
brain tells me that today should be a pretty quiet day as most traders will
be nervous about taking home positions into the weekend with the opportunity
for the corn market to be limit up or limit down Sunday night depending on
if we get rain and how much.  My gut tells me to ignore my brain and that we
have no idea what is going to happen in the corn market today because the
funds will control where the market is going to go and weather markets are
very difficult to trade.  The direction of wheat will also help determine
the direction of the corn market as that market is very over bot, but it is
the 800lb gorilla.  Option trade could be very heavy today even if futures
don’t move a lot because traders will be looking for short term hedges for
their positions this weekend.  The smart trader is hedged or flat going into
this weekend.  July options expire in a week and are pretty cheap.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                415^0    5^4                   415^2    409^0

ZCU7                419^4    2^0                   420^0    415^2

ZCZ7                 418^2    0^6                   418^4    412^4

ZCH8                427^0    0^4                   427^0    421^6

Early Opening Calls: 2 to 3c higher

Top News

-- Export News: Nonghyup Feed Inc. is looking to purchase as much as 110,000
tons of corn, and 105,000 tons of feed wheat, according to traders.

-- Drought could cost Ukraine as much as 10 million tons, 26.3% of their
estimated 38 million ton grain harvest this year,  the country's Prime
Minister said.

-- US Department of Agriculture's Gale Buchanan, is in Brazil discussing
ethanol research cooperation focusing on cellulosic ethanol, between the two
countries.

-- EU internal market sale of 160,444 T of Hungarian corn sold at 131 Euros
per T acc. to traders

-- Dalian Corn futures settled lower in overnight trade.

-- eCBOT Vol: 236,596; Pit Vol.: 88,593; Open Interest change: -3,827

-- Funds aggressive again after Corn Thursday 10,000 Corn contracts.--
Weather: Normal to Above Temps. Normal Precip. The Corn Belt will be mostly
dry with only a few scattered showers in the west today.

-- Outside markets. Energy complex crude lower; gasoline mixed; Gold &
Silver higher; US $ lower vs. Euro, higher vs. Yen

Cash Markets

--CIF Corn:  June +40 to +42,  July +43 to +45, LH July +44 to +47, Aug. +40
to +??, Sept. +38 to +41, Oct. +40 to +42, Nov. +40 to +??, Dec. +43 to ??

TREND:

The energy markets maintained the gains of yesterday and added. This should
be further signs of the inflationary environment that has developed all over
the world. The higher interest rates are a sure part of this. What does this
mean to the commodity circle? More index fund involvement?

Increased margins on wheat are not burdensome considering the trade but
could have a negative bias. The rains in hard wheat country continue to
cause deterioration. Market is very over bot and near counts---think I said
that last night. Follow any reversal trade to the down side---could get ugly
if and wheat it happens.



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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