Linn Group Morning Corn Comment

CHICAGO - Jul 5/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The positive weather outlook and technical pressure pushed corn prices lower
again on Tuesday.  The current weather remains very conducive for growing
crops as some of the dry areas are receiving rains and temperatures are
about average with very little excessive heat.  Longer term forecasts are
very benign the extended outlook is less threatening than a couple of weeks
ago.  Corn is beginning to enter its key pollination phase and the lack of
excessive heat will help build yields and since the release of the USDA
report on Friday showing huge acres of corn planted, many traders are
building in a huge crop to current prices.  Technically, the December
contract couldn't hold support areas and hit sell stops, pushing it even
lower.  Technicals turned sour and the huge buying of December corn $3.00
puts helped pressure futures prices.  July remains the most important month
for determining yields for corn because of pollination and the reduction of
the La Nina affect points to excellent growing conditions.  Exports remain
quiet even with the significantly lower prices over the last week and China
still maintains that it has plenty of corn and possibly with be exporting
corn.  The government is worried about having enough corn for food and feed
and is denying new bio-diesel/ethanol plants regardless of the type of crop
used to make the fuel.  Volume was moderate/heavy and funds were active
sellers of close to 10,000.

eCBOT market rebounded back for the sell off on Tuesday with the December
contract closing almost 6 cents higher.  Technically, traders said the corn
market was over sold and due for a bounce, especially with the soybeans and
wheat moving double digits higher.  Because of the 4th of July holiday,
weekly export sales will be released tomorrow instead of today.  Weather
forecasts have not really changed over the last couple days and that is what
is needed to get corn to rally.  Currently, weather conditions are excellent
for crop development and unless it gets hot during the pollination stage of
corn development, the corn market will just not step up.  Currently, corn is
a follower in the grain complex, so if beans and wheat rally back up, corn
will try and follow, but there just isn't any reason to currently buy corn
and you will find plenty of traders willing to step out and sell rally's in
corn.  The sell off on Tuesday was probably over done on Tuesday and the
market will probably bounce today, at least on the opening, but look for
corn to have a hard time.  Beans and wheat will be the leader in the grain
complex.  There are many traders on and off the floors that are off the rest
of the week, so watch for unexpected volatility and over reactions by the
markets.  This was probably the issue on Tuesday as the markets probably
went lower than expected.  Keep an eye on the weather forecasts because any
hint of hot weather in the next 3 weeks will pump corn right back up.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                323^0    3^0                   325^2    322^6

ZCU7                334^2    5^6                   336^6    330^4

ZCZ7                 343^6    5^6                   346^4    340^2

ZCH8                359^0    7^2                   360^0    354^2

Early Opening Calls: 3-5 higher

Top News

**USDA Export Sales report will be released on Friday, July 6, 2007, because
of the 4th of July holiday.

-- Corn Deliveries: 1,369; Bunge stopped 9

-- Dalian Corn futures were lower.

-- eCBOT Vol: 196,051; Pit Vol.: 77,977; Open Interest change: +4,376

-- Weather: Normal Temps.   Normal Precip. The Corn Belt will see some
showers and thunderstorms in south eastern sections today.

-- Outside markets. Energy complex higher, NY crude hits 72.08 intraday high
highest since Aug 2006; Gold & Silver both higher; US $ lower vs. Euro,
mixed vs. Yen.

Cash Markets

--CIF Corn:  July +43 to +45, LH July +45 to +47, Aug. +46 to +49, Sept. +45
to +48, Oct. +40 to +42, Nov. +40 to +45, Dec. +44 to +48

TREND:

Thought wheat/corn was done---but it certainly bounced back today. Concerned
the fundamental picture in world wheat is tight enough to be a driving force
here. Do not fade a rally.

Corn is different---not a people food and has the expanded US production to
weigh on price action. Is very oversold and due a bounce-sell it or sell
calls on the rally to capture some of the leaking volatility. Spreads in new
crop corn should stay under pressure.



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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