Linn Group Morning Corn Comment

CHICAGO - Jul 9/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Friday as the hot/dry weather moved into the
Midwest over the next couple of days, especially hot in western areas of the
Midwest which are especially vulnerable.  Western areas of IA and MN have
been very dry and have missed much of the rain this summer and many traders
feel we will see the a reduction in the crop condition report released later
today after the close.  Weekly export sales that we released on Friday
morning were also supportive of the corn market as the actual sales were
almost double the trade estimates.  On the negative side, Informa released
their corn estimate at 13.375 billion bu, with an average yield of 156.6.
These numbers are inline with what traders have been talking about, but it
is now in print by a leading grain analyst.  Technicians also talking about
the market being oversold, but it was the hot/dry weekend and the much
better export sales that helped corn make that extra push to close almost 10
cents higher.  Volume on Friday was light/moderate, not unexpected with many
traders out because of the mid-week holiday and funds bot 5,000+ by the end
of the session.  Weather remains the key for corn development as we get into
the pollination stage of the corn market and current forecasts point to
cool/wet weather for the next 7-10 days.

eCBOT market sold off on Sunday night as the hot weather passed through the
Midwest over the weekend and now we will have much cooler weather and the
chance of rain over the next 7-10 days.  After being up almost 10 cents on
Friday, the December closed 4 ½ lower.  Weather is very important this time
of year as corn reaches its pollination stage determining yield potential.
The world is depending on a huge crop from the US as not only domestic
demand, but world demand for corn has reached new highs.  Condition reports
to be released after the close today are expecting to be unchanged to
slightly lower, but I don’t think many traders will be surprised if it is
lower because of troubles in the western corn belt.  This cooler/wetter
forecast during pollination is exactly what the doctor would order if he was
looking for excellent yields.  After the hot weather most of the Midwest
experienced over the last couple of days, the cooler/wetter forecast is
exactly what the crops need to help relieve any stress.  Corn should
probably have trouble rallying and the market will attempt sell off after
the rally on Thursday and Friday of last week.  Weather remains bearish and
there doesn’t seem to be much of a chance of that forecast to change, but
the hot/dry weather does come back in the 8-14 day and could help keep corn
from completely breaking down.  Calls will be 3-5 lower and I would look for
a choppy trade unless the rest of the grain complex sells off.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN7                327^2    -7^2                  334^0    325^2

ZCU7                337^2    -4^2                  345^2    332^4

ZCZ7                 347^4    -4^4                  355^0    342^6

ZCH8                361^0    -4^2                  368^0    357^0

Early Opening Calls: 3 to 5c lower

Top News

-- USDA crop progress report released this afternoon at 3pm CDT.

-- Int'l Energy Agency sees 1.75 mln bpd global biofuel production by 2012
twice that of the 2006 level, but sees potential global capacity at 2.92 mln
bpd, despite growing biofuel use, it deems it as marginal compared to
petroleum

-- Dalian Corn futures lower overnight.

-- eCBOT Vol: 142,298; Pit Vol.: 46,537; Open Interest change: -6,771

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

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Jly        -7/-2  Q +46/48 U             -5/0 U +75/ U              360

Aug      -3/0 Q               +47/50 U             +15/20 U         +75/ U
400

Oc/No   -3/+8 X              +42/45 U             +35/   Z
530

Truck    Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago            -45 Q   +4 U    -57 U

Toledo   -56 Q   -6 U     -45 U

Dec ILL -40 Q   -5 U                -6 Q                  -250 Q

TREND:

Wheat took a back seat on Fri but at the end of the day came back one more
time to rally in spite of the Friday reversal that implied an end to the
rally---not so. If and when that reversal comes out wheat goes another $1.00
higher real quick.

Corn may go a little further than I thought earlier this week. The break out
level of 3.58 should be tested but the first Fib retracement is all the way
up at 3.72.  Sold some CZ 360 and 370 calls today against small corn longs.
Also sold CZ 250 straddles at 52 cents for an effort to add income to farmer
marketing. Will add to short sales at 4.00 and will cover some short cash
sales at 3.00. Both are good trades and the vol in corn should continue to
leak out.



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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