Linn Group Morning Corn Comment

CHICAGO - Jul 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Thursday as traders came back for the mid
week holiday that had disappointing rains in some of the dry areas and
hot/dry weather moving into the Midwest over the weekend.  Traders also
pointed to the strong rally in the wheat market and a technical bounce after
the big sell off on Tuesday.  Volume was pretty light which isn't unexpected
with a mid-week holiday and funds were back on the buy side, buying app.
5,000 contracts.  Remember, the corn crop is in the early stages of the
crucial pollination stage and any threat of hot/dry weather in the coming
weeks will push prices higher.  Corn is a demand market and that shouldn't
be forgotten even though there is a record number of acres planted and the
crops look great.  There will be customers there to buy lower corn prices,
helping to support corn and prevent a big sell off.  We have seen corn drop
95 cents in the last 12 trading days.  Traders starting to get very worried
about the northwest Midwest as they haven't received any rain for over 20
days, it has been hot, and there isn't any significant rain forecast.
Current weather forecast shows hot/dry weather this weekend, cool next week
and then hot/dry again in the second week.

eCBOT market was higher overnight as bulls try and talk about the hot/dry
weather that is forecast in the 2nd week of the forecast.  Corn was probably
oversold after Tuesday's sell off, so it was due a bounce and the bulls are
looking for any reason to try and rally corn.  Weekly export sales were very
strong, which wasn't unexpected with the lower prices.  Sales were estimated
at 700,000 to 1.05 mil and actual sales were closer to 1.8 mil.  See details
below.  Corn is probably going to take a back seat to the bean and wheat
markets, especially this time of the year.  Weather could give corn a big
spike, but attempting to attack June highs are probably unrealistic and
would be very difficult.  At these higher prices and in weather markets,
support and resistance numbers can become just meaningless words.  Expect
the market to open higher, inline with the closes overnight, but it should
have trouble rallying unless the weather forecasters convince the shorts
that the hot/dry weather forecast 2 weeks out is for real.  It will be
tough.  Many traders on and off the floor are gone again today, so I would
expect some early movement and then the market will chop around.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                327^0    3^0                   327^0    323^2

ZCU7                335^6    3^2                   338^2    332^0

ZCZ7                 345^2    2^6                   347^4    341^4

ZCH8                361^0    4^4                   361^0    356^0

Early Opening Calls: 2 to 3c higher

Top News

**USDA Corn 06/07 Export Sales Net: 1.106 mt; 07/08 Export Sales Net:
886,000 mt; expected 700,000- 1.1 mln

**USDA reports private sales of 116,000 mt sold to Unknown for 07/08
delivery

-- High prices have caused the biggest feed producer in South Korea to pass
on a tender to purchase 275,000 tons of corn, according to traders.

-- CME offers an additional +1.6% to 36.2% total of the combined company to
CBOT to make the merger offer more attractive

-- CME says large institutional CBOT shareholder Caledonia fund will now
support the merger agreement

-- Dalian Corn futures mixed overnight.

-- eCBOT Vol: 132,762; Pit Vol.: 44,774; Open Interest change: -3,384

-- Weather: Normal to Below Temps. Normal Precip. The Corn belt looks dry
today into Sunday.

-- Outside markets. Energy complex: crude nearbys higher, deferreds lower;
Gold & Silver: lower; US $ lower vs. Yen & Euro

Cash Markets

--CIF Corn:  July +47 to +50, LH July +48 to +50, Aug. +48 to +50, Sept. +46
to +50, Oct. +41 to +42, Nov. +41 to +45, Dec. +44 to +48

TREND:

Wheat has taken over as leader in the grain room. Chi again gained on KC
today allowing a chance to take on that trade at discounts in KC. Look for
Chi to run into a small problem just 10 to 15 cents over the close but this
market should not be here if the trade was done and last weeks highs were
the highs for this crop---the Friday reversal ---means those highs are in
danger of coming out. If and when that happens wheat goes another $1.00 real
quick. This market is a supply driven market with a spike in prices that
should cause world producers to expand acres immediately---will get the
reduced inventory fixed in one year?

Corn will have problems on a small gain above today's highs. Sell CZ 360
calls at 22 to 25 cents to add to farmer new crop pricing.



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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