Linn Group Morning Corn Comment

CHICAGO - Jul 25/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Tuesday as traders said the market was
technically over sold and it got some supportive fundamental news.  The
December contract closed up 1 ½ but it was 5 cents off the highs earlier in
the session.  Technicians said the corn market was over sold after the sell
off on Monday into new 9 month lows and due a bounce.  Also, the crop
condition report released after the close on Monday was a little worse than
traders were expecting so that helped the corn market move higher.  Traders
were expecting a little better number for the good/excellent and the actual
came in a little lower.  Wheat also surged higher on Tuesday, trading over
25 cents higher during the session only to close over 20 cents higher.
While it is difficult to substitute corn for wheat, a much higher wheat
market will help support corn, especially if there is other positive news,
no matter how small.  The weather forecast remains very conducive for crop
development as the latest forecast has good rain and warm weather.  So.
Korea passed on US corn adding some negative news to the market, but exports
still remain strong.  Volume was moderate to light and funds were back on
the buy side for 4,000+ contracts by the end of the day.

eCBOT market was a little higher overnight on very little new news. Traders
want to talk about profit taking after the big sell off on Monday and
technicians want to point to over sold conditions.  Traders see very little
reason for corn to rally as the weather remains almost perfect for much of
the corn belt thus increasing the chances of record yields and record
production on the back of huge acreage.  Different traders feel that the
corn market is probably going to stagnate for the next 30 to 60 days unless
there is a surprise to the market.  The small spec trader is short the
market and we will have longs and users willing to sell the market on
rallies.  Traders feel consumption demands should surface at these lower
prices and with basis levels firming in the export markets, the may imply a
new round of export buying.  Look for the market to open a little higher
today but have trouble rallying just like we saw yesterday.  The 20-25 cent
higher move in the wheat probably kept corn higher on the day.  There was
very little new news overnight so corn will probably continue to be a
follower in the grain complex.  I would expect to see more aggressive
selling on a rally in corn today unless wheat surges higher.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                314^2    2^6                   314^2    311^0

ZCZ7                 330^0    3^2                   330^0    326^4

ZCH8                345^2    3^2                   345^2    342^0

ZCK8                355^4    2^4                   355^4    353^0

Early Opening Calls: 1-3 higher

Top News

-- 06/07 South African corn crop forecast down to 6.9 from 7.05 mln. tons

-- Exports: South Korea tendering for 110,000 mt. opt. org. non GMO Corn for
Oct.

-- 35% hike over last year for Spain's estimated barley crop to 11.3 mln.
tons, according to the country's Agriculture Ministry.

-- Funds back to the buy side Tuesday buying 4,000 Corn.

-- Dalian Corn futures closed lower overnight. Jan Corn futures were -18
Yuan lower, while May futures were -15 Yuan.

-- Funds back to the buy side Tuesday buying 4,000 Corn.

-- eCBOT Vol: 119,257; Pit Vol.: 39,355; Open Interest change: -8,461

-- Weather: Above Normal  Temps.  Normal to Below Precip. Thursday into
Saturday Corn Belt will see scattered showers

-- Outside markets. Energy: crude mixed, products higher ; Gold off $6 &
Silver off 15c ; US $ higher vs. Euro & Yen

Cash Markets

-- CIF Corn up 1-3:  July +47 to +49, Aug. +48 to +49, Sept. +48 to +49.

TREND:

There is no easy way to predict where or when for wheat prices. There is a
$7 magnet but this market may go higher. It is a world problem---US wheat
stands to lose some additional acres but will most likely be replaced with
larger yields in the “good” wheat harvest in the northern hard wheat belt.
Spring wheat is still a moving target. Canada stats imply that we are losing
bushels in US and Canada both. With Europe out of the market still, there is
no way to know just how bad the tightening may have to get? Do not stand in
the way. However, this is a one-year phenomenon. We will see such an
expansion of world wheat acres as you have never seen in the coming growing
season.

Major support in CZ at 3.00. Resistance stacked at 3.35 to 3.60. Suspect it
will be very hard to rally back into the higher end of that range any time
soon. Short puts and calls still the way to handle corn prices today. Note
the comments above about wheat acres---will be a skyhook for old crop corn
prices with new crop CZ(08) trading 55 to 60 over CZ(07). Full carry is
about 75 cents but hard to see this spread this wide this early in the
season? Means that if CZ8 goes up to hold onto acres, old crop has to go
along?



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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