Linn Group Morning Corn Comment

CHICAGO - Jun 18/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market rallied again on Friday into the weekend as traders are
still very worried about the dryness in the eastern corn belt with limited
rain opportunities over the next week.  The July contract closed 9 ½ higher
and the December closed 6 ¾ higher.  December very close to the contract
high close back in February.  The weather remains the main factor affecting
the corn prices as traders are very worried about the eastern corn belt.
Many traders feel we are in the middle of a very important time for the corn
because even though it is still very early, if the eastern corn belt doesn’t
get good rains over the next two weeks or so, the market could just explode
at we could see supply/demand issues that we have never seen in the past.
Informa released slightly higher corn acres on Friday morning after the
opening, but the market shook off the numbers and just traded the weather
forecast, which comes out 5 times a day and is not very conclusive.
Liquidation of wheat/corn spreads also helped corn prices as the difference
in prices has retreated from about $2, where it has only been 5 times in
history.  Volume was pretty strong, but not as big as Thursday, but funds
were back buying corn, probably over 7,000 contracts.

eCBOT market was higher overnight and closed strong as the weather forecast
dominates the direction for corn.  The July and December closed 7 ¼ higher
as the chance of rain is still viable, but less likely to help the very dry
areas of the eastern corn belt.  The market is very concerned about the dry
areas in the eastern corn belt, but also the uncertainty of the weather
forecasts.  Different models are giving different forecasts with no
consensus.  That is helping to put uncertainty into the corn market and it
doesn’t need anymore volatility.  The USDA releases the crop condition
report this afternoon after the close today with the market estimating a
2-4% decline in good/excellent, but we would be surprised if it is more than
2-4% because it hasn’t declined the last 2 weeks when some traders thought
we would see a decline.  Traders continue to say that weather is the only
real determining factor for corn prices and the next week or so could set
the tone for the next month.  Corn should open inline with the closes
overnight, but could get very dicey if traders believe the weather forecasts
calling for the ridge to build back up next week, keeping rain away from the
driest areas.  Rains the next 2 days may look could on radar, but actual
totals should be erratic and probably too light to do anything but get the
streets wet with the best chance of good rains is later in the week.  July
option expire on Friday and there is a lot of traders short upside calls, so
if these guys get caught, they will have to buy futures, thus pushing prices
higher.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                426^2    7^2                   428^6    421^4

ZCU7                433^4    7^4                   436^0    428^4

ZCZ7                 431^4    7^2                   435^0    426^0

ZCH8                439^4    7^0                   443^0    433^0

Early Opening Calls: 7 to 10c higher

Top News

-- USDA Crop Progress Reports this afternoon.  Some analyst expect a slight
drop in corn & soybean conditions.

-- Morocco state grain buyer plans July 4 150,000 mt barley tender for Sept
delivery, acc to company official

-- Informa Recap:  Corn acreage increased very slightly (+0.14%), Soybeans
increased +3.7%, spring wheat decreased very slightly (-0.3%)

-- Dalian Corn futures lower overnight

-- Funds continue their buying ways Friday buying 9,000 Soybeans, 7,000
Corn, 2,500 Meal, 3,000 Oil.   Even  Wheat.

-- eCBOT Vol: 203,828; Pit Vol.: 69,372; Open Interest change: +48

-- Weather Weekend rains were less than expected helping support Corn and
Soybeans overnight.

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

Cash Markets

--CIF Corn:  June +36 to +40,  July +39 to +41, LH July +40 to +44, Aug. +39
to +41, Sept. +38 to +41, Oct. +39 to +41, Nov. +39 to +41, Dec. +43 to ??

TREND:

The market is overbot and ripe for a correction on better weather than
anticipated---or a rally on weather that does not materialize. All short
term!

One more time I am reminded that this is a demand driven market ---
characterized by rallies and breaks that are fairly well predictable. It is
sure come to pass that the corn market did not spend any time below 3.50 on
the last break and I wonder if there is a new plateau that will develop. The
top side of these markets has opened up so that rallies do not have a
natural high. This stair step action can continue for a while.

The only market that has any supply side dynamics has been the wheat trade
over the last two weeks.



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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