Linn Group Morning Corn Comment

CHICAGO - Jul 2/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market reacted as expected with the huge acre number released by
the USDA on Friday morning.  The calls for corn to open higher on Friday
morning were very premature as the market couldn't get higher and opened
unchanged, slightly lower and sold off almost immediately.  The only thing
keeping it from opening 10-15 lower was beans up 50 cents and wheat up 20
cents.  With Friday's decline in futures prices, corn reached a 8 month low
as the high prices into the growing season obviously got the farmers
attention and they planted huge acres.  Traders were saying after the
release of the USDA acreage estimate that most of the acreage risk premium
is out of the corn market and all that matters now is weather and yields.
Volume was very heavy and funds sold 10,000 contracts by the end of the day.
December corn closed in the middle of its range, but a lot of the recovery
had to do with traders covering the long wheat/short corn spread trade that
has been popular and a huge winner.  Wheat actually was trading $3.00 higher
than corn vs. December.  The covering of this trade contributed to corn
coming off it's lows and wheat selling off almost 30 cents after being up 30
cents early in the session.  Deliveries were right at expectations of 1,114
contracts.

eCBOT market was a little lower on the opening overnight, but was quickly
higher, trading almost 6 cents higher in the first 30 minutes, but
eventually quieted down and was 1-2 cents higher by the end of the night
session.  Traders seem to think that all the negative news in corn is out in
the open.  There is obviously been huge corn acres planted, the crop looks
to be in excellent condition, and the weather forecast remains very
conducive for growing.  As one trader said during the day on Friday, a lot
of the premium and surprise is out of the corn market.  Don't forget, we are
approaching the pollination phase for corn, which is very important, but the
conditions remain very good.  This pollination phase will remain the topic
of conversation in coming weeks.  Look for the corn market to open
unchanged, maybe a couple higher or lower depending on trade before the
opening.  Spread trade should dominate activity again today as traders will
look to see if we are going to continue to see further liquidation of the
wheat/corn trade or if it was all done on Friday.  Sunday night's action
points to not a lot of further liquidation, but we will find out for sure
today.  With the 4th of July holiday in the middle of the week, you will see
many traders on and off the floor taking time off, so trading could be
volatile, but with the USDA report behind us and no weather premium, I would
expect it to be a quiet couple of days this week.  Watch the wheat/corn
spreads early in the session for direction of the market.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                333^4    4^0                   337^4    330^0

ZCU7                343^2    3^2                   348^6    340^2

ZCZ7                 352^0    1^2                   358^4    349^4

ZCH8                366^0    2^2                   372^0    363^6

Early Opening Calls: 2 to 4c higher

Top News

-- Chinese Exec sees 07/08 corn surplus of 2 mln mt, says current mkt year
surplus at 4.48 mln mt. State run Jilian Grain exec says gov't policy to
slow corn processing industry will help retain healthy surpluses

-- Suez Canal at standstill as officials for the canal authority say bulk
cargo ship breaks down impeding other ships in the canal. No timeframe was
given to clear the backlog of ships

-- Dalian Corn futures closed lower overnight

-- eCBOT Vol: 243,162; Pit Vol.: 113,366; Open Interest change: +11,208

-- Outside markets. Energy complex lower; Gold $5 higher & Silver 14-15c
higher; US $ lower vs. Euro & Yen

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

June     +0/10 N             +47/49 N             -20/-15 U         +70/ U
370

July      +0/10 N             +47/50 N             -15/-5 U           +70/ U
360

Aug      -10/0 Q             +44/47 U             +0/5  U           +70/ U
370

Truck                Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago                       -37 N    +2 N    -45 N

Toledo              -40 N    +2 N    -70 N

Dec ILL            -30 N    +5 N                           -3 N      -225 N

TREND:

Crop report is behind us. The major change today is the reversal down in the
wheat trade. This should be a very difficult negative signal to overcome and
implies a potential top ---key reversal unless the market comes back and
changes the look immediately. Yes we can say it is the Chi wheat and it was
too strong to begin with. The KC and Mpls markets gained on Chi all week and
this should continue no matter the direction in wheat flat price. In the Dec
KC gained almost 30 cents on the week. One other important change was the
gain in wheat over corn into record all time highs. The reversal back down
in that chart implies this pattern is done no matter what happens to flat
price. In other words, it wheat does resurrect a bull trend, corn will
follow more closely. Those charts are shown below

Over a $1.00 lower in corn in just 10 days. Down into the down side counts
and should be supported here for a while---but it is still a weather market.
Is also a demand driven trade so that the market will tend to firm as the
buyers surface.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.