Linn Group Morning Corn Comment

CHICAGO - Jun 19/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market went lower on Monday on quiet trade as corn followed wheat
lower and some forecasts added more rain into the dry areas of the eastern
corn belt.  There was also some spreading as trader continued to liquidate
their long wheat/short corn positions and index funds rolled their July
contracts into September and December.  The eastern corn belt remains dry
and top soil levels are low, but as the old saying goes, rain makes grain,
so any rain that actually falls will be viewed as bearish and put pressure
on the corn market.  Volume was moderate/heavy, but not as big as some days
last week.  Even though the volume was pretty good, it seemed like a very
quiet day.  Funds were net sellers of corn, app. 3-5,000 contracts by the
end of the day.  No new news out in corn so traders are turning their
attention to the weather forecasts and there doesn't seem to be a consensus.
Traders seemed to also build a decline in corn condition report that was
released after the close.

eCBOT market was lower overnight with the July almost 10 cents lower and the
December down 7 1/2.  The scattered rain across the eastern corn belt pushed
the corn lower as traders saw most of the dry areas getting at least a
passing shower with some areas receiving good rains.  The USDA released
their crop condition report after the close showing good/excellent
conditions at 70%, down from last weeks 77%.  This was lower than the trade
estimates, but many traders said they feel this decline was already built
into the futures price.  On an ordinary day, the reduction in crop
conditions would be very supportive of the corn market and push prices
higher, but the decline in crop conditions was trumped by the rain showers
across the eastern corn belt.  Traders this morning are trying to figure out
rain totals across the eastern corn belt and it looks like almost everybody
received some rain with some areas receiving good totals.  These rains are
not going to erase the drought/dry areas, but it will help crops get through
another week of hot weather.  The corn market should open inline with the
close of the overnight session, but I would expect we will find some support
as traders try and figure out rain totals and look at the weather forecast.
One popular weather forecaster has the 90's back this weekend and the mid to
upper 90's the beginning of next week.  I would expect corn to open lower
and the market to see what is there.  Do we find further selling or does the
market look at this as an opportunity to buy a lower market?

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                406^6    -9^2                  417^4    405^2

ZCU7                414^4    -9^4                  425^4    414^0

ZCZ7                 416^0    -7^4                  425^6    415^0

ZCH8                425^0    -6^6                  434^0    425^0

Early Opening Calls: 7-10 lower

Top News

Corn Progress & Conditions Mini-Recap

Corn Crop Conditions Latest: VP= 2; P= 6; F= 22; G= 53; EX= 17

Corn Crop Conditions Prior Wk: VP= 1; P= 4; F= 18; G= 57; EX= 20

Corn Crop Conditions Yr Ago Wk: VP= 2; P= 6; F= 24; G= 52; EX= 16

-- USDA Weekly Corn Export Inspections: 37.260 mln bu.

-- Crop conditions were also  released showed 70% of the crop ranges from
good to excellent, down 7% from last week. This should give us a higher open
in the night session.

-- Dalian Corn futures lower overnight inline w/ eCBOT prices.

-- eCBOT Vol: 166,759; Pit Vol.: 56,708; Open Interest change: +6,391

Cash Markets

--CIF Corn:  June +36 to +41,  July +39 to +42, LH July +41 to +45, Aug. +39
to +44, Sept. +37 to +42, Oct. +38 to +40, Nov. +39 to +42, Dec. +43 to ??

TREND:

The initial reaction to the crop reports is for corn and beans to be sharply
higher. This has to be offset some by the rains over the
Midwest---especially east of the Miss River tonight.

Look for the market to start stronger but not with the enthusiasm being
expected as these reports were released---look for corn and wheat to be 3 to
5 higher and beans to be 7 to 10 higher

One thing that is important in this market is the fact that wheat has traded
into new contract highs so that the top again opens up. This can lead corn
and other markets so that all the trade becomes more positive. People food
has to include soyoil in this trend also



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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