Linn Group Morning Corn Comment

CHICAGO - Jul 20/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off on Thursday as the plentiful rains across the
Midwest seemed to convince most traders that the corn crop, for the most
part, is in excellent condition and it is especially beneficial because it
is happening during pollination.  The December contract closed 6 cents
lower, but almost 5 cents off the lows as beans rallied late in the day.
Wheat/corn spreading also helped push corn lower as traders are adding to
their positions pushing the differential to over $3.00 vs. the December
contract.  This has been a big trade with many traders that thought the
spread couldn’t go past $3.00 are now talking about this spread having legs
and maybe going to $4.00.  Weather remains the focus for the corn as some
areas in western IA and Nebraska that have been very dry received unexpected
rains.  Weekly export sales remain very strong coming in toward the top end
of estimates and cash traders say this will continue as many users have
needs to meet because of the higher prices this winter and spring.  Volume
was moderate as funds sold close to 5,000 contracts by the end of the
session.

eCBOT market was mixed overnight but closed almost 4 cents lower, probably
on the back of the soybean market and the weather forecasts coming together
and talking about hot/dry weather in the 6-10 day forecast.  This hot/dry
weather will have a bigger effect on the beans, but late developing corn
will be affected as well and some private crop watchers are seeing some late
developing corn in Ohio and Iowa.  It is the end of the week and it looks
like the corn market is going to open higher, but traders I talked to see
traders selling any rally’s.  Beans and/or wheat are the leader of the grain
complex and corn is the follower.  Export sales should remain strong, so
that will help support corn, but the prospect for a huge crop will weigh on
prices.  Traders said they look for a 2 sided/choppy trade today with
traders positioning themselves for the weekend.  Remember what happened last
weekend when the weather forecast changed on Sunday.  Now this weekend is
later in the month of July so that much more of the corn crop should be done
with pollination, but traders are always nervous carrying positions into a
summer weekend.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                324^4    3^2                   325^6    320^0

ZCZ7                 340^0    3^6                   341^0    335^2

ZCH8                353^6    2^0                   356^4    351^0

ZCK8                363^6    1^4                   367^0    362^0

Early Opening Calls: 2-4 higher

Top News

** CropScout.com**

-- To help its local animal feed industry, Indonesia considers scrapping its
5% corn import duty, acc. to Ag ministry official

-- 142,000 m t of Hungrary corn sold on internal EU markets Thursday at
146.08 euros/mt, acc. to EU intervention official

-- 8,399 mt of French barley sold on internal EU markets Thursday at 163.26
euros/mt, acc. to EU intervention official

-- 100,000 feed barley purchase tender completed by Tunisia on Thursday

-- USDA Semi Annual cattle inventory to be released at 2 pm CDT Friday

-- USDA Cattle On Feed to be released Friday afternoon at 2pm CDT.  Traders
& analyst collectively see Cattle On Feed at 99%, placements at 90.0%, while
marketings are expected at 96.5%.

-- Traders and analysts expect this afternoon's pork belly stocks at 51.8
Mln lbs, USDA cold storage report to be released at 2pm CDT Friday

-- Dalian Corn futures settled lower

-- eCBOT Vol: 133,717; Pit Vol.: 59,418; Open Interest change: +1,043

-- Outside markets. Energy complex lead month crude lower, but deferreds
higher, products lower; Gold $1.20 higher & Silver 7c higher; US $ lower vs.
Euro & Yen, China raised 1 yr lending & borrowing rates.

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Jly        -13/-12 Q           +41/43 U              -5/  U
430

Aug      -10/-5 Q            +42/44 U             +12/  U           +60/ U
460

Oc/No   -24/-10 X           +35/38 U             +30/  Z            +70/ U
600

Truck                Beans   Corn    Wheat              Meal Hi-pro
Oil

Chicago                       -65 Q    +4 U    -60 U

Toledo              -56 Q    +9 U    -35 U

Dec ILL            -54 Q    -10 U                          -14 Q
-325 Q

TREND:

The corn market has come back to test recent lows at $3.31 ½ on December
which is creating some s/t stability but no sign of a change for this bear
pattern. Stay with shorts. Look for selling from $3.40 to $3.45. The $3.40
to $3.50 area should limit any rallies. This market has a broad top that
should extend its decline into downside counts at $3.24½ and then $2.98¼.



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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