Linn Group Morning Corn Comment

CHICAGO - Jul 26/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market remained choppy yesterday as the good weather fought against
the demand for corn.  The December contract only had a 5 cent range on very
light volume and closed ½ higher.  Actual volume yesterday was a little over
100,000 contracts and funds bot 3,000 contracts by the end of the session.
Traders keep saying that the weather is almost near perfect for crop
development in most areas with some of the dry areas receiving rain,
especially the eastern corn belt like Ohio, Michigan, and Indiana.  On the
other side, demand remains very strong and there was some indication of user
buying yesterday.  Technicians want to point to some over sold conditions
and traders taking profit after the 9 month low that was reached on Monday.
The domestic demand for corn for ethanol and feed will help keep a floor in
corn.  Historically, this is a slow time of the year for the corn market and
this year should be no different.  Traders also talking about EU wheat
leading the grain markets lower yesterday and talk of declining feed grain
crops in E. Europe.  These declining crops will create interest in So.
America and US feed grains and possible develop even bigger export demand
for corn.

eCBOT market was a little higher overnight on really no new news.  Some
traders want to talk about bigger export sales this morning helping push
prices higher, but the crop still looks great.  Weekly export sales this
morning were 792,000, a little below the estimate of 800,000 to 1.2 mil.
These export sales will be considered a little negative, but I think most
traders believe that the export sales will be there, if not this week, then
next week.  The big number this morning is the wheat export sales at over
2.0 mil when the upside of the estimate is 1.0 mil.  These big sales should
push wheat a lot higher this morning and this will help support corn and
maybe drag it higher.  Corn is not a substitute for wheat so it won’t go
step in step with a higher move in wheat, but it will probably stop
aggressive selling.  Look for corn to open a little higher this morning, but
it will still have trouble rallying.  Talking to traders this morning, they
are looking for 2 sided trade again today, but wheat and funds could be the
wild card and push corn higher than expected.  Most traders want to sell
option premium in corn or be outright short corn.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                315^2    3^6                   315^2    311^4

ZCZ7                 331^0    3^6                   331^0    327^0

ZCH8                346^2    3^6                   346^2    342^6

ZCK8                355^0    1^2                   355^0    353^0

Early Opening Calls: 1 to 3c higher

Top News

**USDA Corn 06/07 Export Sales Net: 412.5 mt, expected = 800k-1.3 mil, 07/08
= 380.9

-- 80,000 mt of Non GMO corn bought by corn processing group in S Korea.
25k mt was Chinese origin, while the remainder was US or S Amer corn for
delivery in Sep & Oct

-- 40% of Hungarian corn crop burned due to scorching heat, acc. to local
farmer group.  Group says expects more damage to corn.

-- USDA Ag Sec. Johanns told reporters Wednesday that he and the Presidents
entire team of senior advisors will recommend the Farm Bill in it’s present
form if passed be vetoed.

-- USDA Ag Sec. sees 5 yr time horizon before ethanol made from cellulose
material will impact the US energy markets, cites 3 yr lead until viable
cellulose technology & add'l 2 years lead time for facility engineering &
construction

-- Moderate Fund trade Wednesday. Funds bought 3,000 Corn.

-- Dalian Corn futures higher.

-- eCBOT Vol: 79,292; Pit Vol.: 24,513; Open Interest change: -3,214

-- Weather: Above Normal Temps. Below Normal Precip.

-- Outside markets. Energy: crude $1 higher, gasoline 4c higher ; Gold
trading either side of unch & Silver: mixed; US $ lower vs. Euro & Yen.

Cash Markets

-- CIF Corn weaker off  1 -2. July +44 to +47, Aug. +46 to +48, Sept. +47 to
+49, Oct. +38 to +40, Nov. +40 to +42, Dec. +44 to +47, Jan. +33 to +35

TREND:

Very concerned about the wheat market coming to life and making a run
higher. Second counts on WZ were 6.62 and have been made. Should see a small
set back here---but if the highs come out---we have a formation that could
take this market right to the next counts of 7.67?

Started to bear spread some Z8/N8 today. Trading near even money and should
eventually widen as the big increase in wheat acres surfaces. If the spot
market rallies $1.00 it could tighten the spread some so do it on a
scale---but this spread should approximate full carries with big acres all
over the world—not just in the US.

Corn bears may be disappointed that the market did not move back into a bear
trade today---bulls are certainly disappointed it did not rally. The
sideways action for 3 days is correcting the oversold situation. Look for a
sharper move based on the lows or highs of the last few days coming out.
Seem to be pressing every night so it could be a surprise move to the top
side---3.40 is tough resistance there.



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/

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.