Linn Group Morning Soybean Comment

CHICAGO - Jul 18/07 - SNS -- Following is the morning soybean futures comment from the futures commission brokerage firm Linn Group.

The Sell-Off continues at the CBOT as soybeans plummeted for the 2nd
consecutive day losing 38 ¼ cents in the November contract. For the week so
far we have lost 88 ¼ cents in the November contract from Fridays close. For
the 2 day period soybeans have lost 9% of their value. Traders say the break
is due to wetter forecasts in the Midwest and has ignited a technical sell
off and triggering sell stops on the break. To add insult to injury soybean
margins were raised on Tuesday adding to the problems for those that went
home long on Friday. Volume was very heavy with an estimated 224,688 soybean
futures traded, 76,297 oil futures traded and 85,353 meal futures traded.
Fund liquidation was significant again with funds selling an estimated
10,000 soybean futures on Tuesday, sold 4,500 meal and 1,000 oil.

Overnight soybeans recovered slightly gaining back 10 cents of their recent
losses. Early calls are higher and talk of a significant drying period
behind the current storms coming across the Midwest and could be the impetus
for a recovery. Talk persists of problems in certain growing area with some
saying the recent rains have not been enough to satisfy the shortfall of
moisture especially if we go into a long hot dry period. Traders say the
market is overdone and with the market being down almost 90 cents in 2 days
a bounce is to be expected. Spot basis bids for soybeans in the Midwest were
steady as basis levels remain at historically weak levels at more than $1.00
under August futures. Overnight Chinese Soybean futures, meal and oil all
closed lower. Malaysian Palm oil futures closed higher.

Early opening calls: Soybeans 8 to 12 higher, Meal $4.00 to $5.00 higher and
oil .20 to .30 higher.

Top News

-- Oil World lowered their world 2007/08 Soybean crop estimate to 224.2 mmt.
vs. their June estimate of 227.6 mmt. and compares to 236.5 mmt. in
2006/07.

-- Increased grain and cereal demand results in EU government debate to drop
the "10% fallow" rule, that results in 10% of all European crop land set
aside to support prices - could result in 10-17 mil ton more production,
acc. to EU officials

-- 29.69 mln mt of grain output expected for 2007, down around 10% from the
33.05 mln mt forecast earlier by Ukraine based ag analysts.  Wheat
production cut to 13.3 mln mt from prior forecast of 15.3 last month

-- Global Insight:  World ethanol production to exceed 100 bil gallons/year
by the year 2030 - this amounts to 15% of total fuel demand

-- COFCO to finance 300k ton/year and 200k ton/year ethanol facilities in
China that will use sweet potatoes as the primary feedstock, acc. to news
reports

-- Chinese government plans to make significant shift away from using corn
as ethanol feedstock;  instead plans to use sorghum, cassava, etc., to ease
pressure on food supply

-- eCBOT Vol. 152,689; Pit Vol. 68,660; Open Interest Change: -4,938

-- Weather: Above Normal Temps. Below Normal Precip.  The Corn Belt will see
scattered showers and thunderstorms today and Thursday.

-- Outside markets. Energy crude 22c higher, products higher also; Gold &
Silver: both higher; US $ higher vs Euro, vs Yen slightly lower

Cash Markets

-- CIF Soybeans:  July -15 to -8, Aug. -12 to -6, Sept. -20 to -10, Oct. -15
to Opt., Nov. +2 to +20, Jan. +17 to +20



To discuss this report further or for specific trade ideas please contact me
directly

Nathan T. Smith III
Linn Group
nsmith@linngroup.com
toll free: (877) 787-6278
local: (312) 896-2090
fax: (312) 896-2050
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.