Linn Group Morning Corn Comment

CHICAGO - Jul 23/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Friday after opening higher.  The December
contract opened 4-5 higher, but quickly sold off as many traders have been
interested in selling rally’s in corn as the weather remains just about
perfect for crop development and after last weekend, very few traders want
to go into the weekend long corn.  The volume was very light on Friday and
funds were net sellers of only 3,000 contracts by the end of the session.
Weather remains ideal as the corn belt dries out this week, but the
plentiful rains from last week should carry over and the western corn belt
received some much needed rain and it was unexpected.  Many traders on the
grain floor feel the corn crop has been made and you saw option trades on
Friday, selling at the money calls, backing up this sentiment.  The
wheat/corn spread also remains very strong, reaching levels on Thursday and
Friday that the markets haven’t seen in over 30 years.  This spread is
helping keep pressure on the corn market.  Crop condition report will be
released after the close today with most traders expecting little change
from last week.

eCBOT market was lower overnight as traders looked at the current weather
forecast and saw no problems for crop development and almost ideal growing
conditions.  Most areas in the Midwest received excellent rains last week
and the temps this week are near normal while the nights get cool.  Exports
remain strong as we see countries coming into the US almost daily for corn.
We are almost through the important pollination period for corn and there
has been very little trouble, so many traders expect corn prices to drift
lower with very little reason to rally.  The commitment report released
Friday afternoon after the close show large speculators long app. 250,000
contracts down 12,000 and short app. 120,000 contracts up 16,000.  These
numbers didn’t really surprise traders but confirmed what they had been
talking about as many don’t want to be long the corn market.  The wheat and
soybeans will lead the complex and corn will be a follower.  Current weather
conditions are excellent for crop development as the weather focus moves
from corn to beans.  World supply of wheat remains the focus and will keep
wheat from falling back.  Look for corn to open lower and have trouble
rallying and if beans start to sell off aggressively, corn will follow.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                312^6    -5^4                  317^0    312^0

ZCZ7                 328^4    -5^0                  332^0    327^2

ZCH8                343^4    -5^2                  348^2    342^6

ZCK8                353^4    -5^6                  359^2    353^4

Early Opening Calls: 3-5 lower

Top News

-- 56,000 mt tender issued by Israel group for US/S Amer corn, acc. to
traders

-- 110,000 mt of corn tender for by Nonghyup feed of S Korea, acc. to
traders

-- China's agriculture ministry said on it's web site Monday that
stabilizing the autumn grain supply is going to be a big challenge because
of floods, droughts, typhoons, plant disease, and insects.

-- Dalian Corn futures finished Monday overnight trade slightly higher
across active contracts.

-- eCBOT Vol: 114,030; Pit Vol.: 41,941; Open Interest change: -1,678

-- Outside markets. Energy: crude 44c lower, products also lower ; Gold &
Silver: slightly higher; US $ unchanged to slightly higher

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Jly        -32/-16 U           +42/43 U             -5/   U
430

Aug      -30/-22 U           +43/44.5 U          +12/  U           +60/ U
460

Oc/No   -25/-5 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    -18 U                          -14 Q
-385 Q

TREND:

We have a new low close for the move on the weekly corn chart which projects
a further decline to the $3.00 level. That is consistent with our December
downside counts at $2.98 ¼ as well. Stay with shorts. This week’s action has
left $3.40 as resistance for Dec and we should accelerate our break with a
close under $3.30.

Wheat settled near unchanged for the week as it tries to maintain this $6.00
trade. The s/t pattern is still range bound and now should see a break after
our rally into the $6.30 to $6.35 overhead. Look for another test of the
magical $6.00 level – amazing how it holds the break. May see a little
deeper break but expect buying in the $5.90 to $6.00 area. Fade those
extremes.  KC has also stalled at the $6.10 - $6.15 range overhead and is
now ready for another s/t break into the $5.90 to $5.85 area. Same approach,
look for buying against those recent lows.  The Kwu-wu has been a choppy
situation along with the outright wheat market but does show more of a
potential basing pattern in the 15 to 20 under range. Look for a s/t bounce
and target the 5 under level. That will be the key to a possible turn in the
spread.



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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