Linn Group Morning Corn Comment

CHICAGO - Aug 1/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was pretty quiet yesterday as we saw the December close 2
cents higher in a tight 5 cent range.  Traders said there wasn't any new
news out yesterday and the trade reflected the lack of news by just
following the beans higher.  The USDA crop condition report released after
the close on Monday helped support corn, but it wasn't anything very
surprising.  Bulls still talking about the hot/dry weather supporting corn
as it enters its kernel filling stage, but many feel the corn crop, overall,
is in excellent shape regardless of what happens over the next couple of
weeks.  Hot weather could trim yields, but most traders/analysts feel we
will have a huge crop.  Volume was light/moderate and funds were net buyers
of app. 3,000 contracts.  The wheat/corn spread remains a big trade in the
grain complex and continues to keep pressure on the corn against the bullish
weather forecast.  Export news was very quiet overnight as traders await the
release of the weekly export sales tomorrow morning.

eCBOT market was pretty quiet overnight as we saw the corn market basically
unchanged in the December right in the middle of the range.  No new news to
move the corn market except maybe weather, welcome to August.  This time of
year is historically a very slow time in the corn market as traders/analysts
await the release of the August Crop Report next Friday.  Different grain
analysts are releasing their production estimates over the next couple of
days and the Linn Group will release its estimate on Friday at 3pm.  This is
the first big USDA report where analysts are not just guessing on production
numbers but can actually make educated guesses.  The opening call this
morning will be mixed with beans probably giving the direction of the market
as traders worry about how much the hot/dry weather will affect the crops.
Good rains into the weekend across the western corn belt in some of the
driest areas.  It may be too late to make a big difference, but any rain in
these dry areas will be looked at as bearish and help pressure the corn
market.  The bias among traders and technicians is to sell the corn market
and make the market prove you wrong.  Any increase in the rain coverage will
push corn lower, unless beans and/or wheat take off to the upside.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                325^6    0^0                   327^6    323^4

ZCZ7                 342^4    0^2                   344^0    340^0

ZCH8                356^4    -1^0                  359^0    355^4

ZCK8                366^6    -1^4                  369^0    365^4

Early Opening Calls:

Top News

-- The Philippines is considering issuing a tender to purchase 200,000 tons
of yellow corn, due to a decrease in local grain output from recent dry
conditions, officials said.

-- Iowa state researchers study says while food price increases can be
partly attributed to increased grain prices, the severity of corn prices on
food price increases is so clear cut.

-- UK taxi company switching to B30, a 30% biodiesel blend with 70% petrol
diesel, for its fleet of cars.

-- May ethanol production 38% higher from year ago levels to 406,000 bpd
acc. to Renewable Fuels group

-- May ethanol use grew 22% higher from year ago levels to 427,000 bpd acc.
to Renewable Fuels group

-- Colorado beef plant to begin 2nd shift in early Sept & up to full
production by end of year acc. to company official in DJ news interview.
Once fully operational production could demand an up to an extra 6,000 head
of cattle per day.

-- Pilgrim's Pride 2Q eps at 94c vs. year ago quarter of 31c eps loss.

-- Dutch ag ministry says bluetongue disease recently has spread to a total
of 22 southern farms & applies quarantine protocol to infected farms.

-- Dalian Corn futures active contract months were little changed, 2 to 3
Yuan higher.

-- eCBOT Vol. 128,708; Pit Vol. 43,005; Open Interest Change: +1,714

-- Weather: NWS 6- to 10-day forecast for Aug. 6-10 shows above-normal temps
will remain centered over the Corn Belt.

-- Outside markets. Energy: crude oil 35c lower, products lower also ; Gold
$5 lower in Dec. & Silver: 16c lower; US $ slightly higher vs. Euro, lower
vs. Yen

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Jly        +45/46 U           +0/+8 U                        +55/  U
470

Aug      -5/+5 U            +46/49 U           +5/10 U             +60/ U
490

Oct/No  +12/18 X           +37/40 U           +30/ Z              +60/ Z
600

Truck                Beans   Corn     Wheat               Meal Hi-pro
Oil

Chicago                       -60 Q    +4 U    -75 U

Toledo              -55 Q    +8 U    -22 U

Dec ILL            -52 Q    -15 U                          -14 Q
-325 Q

TREND:

The corn market had a limited trade but did manage to hold the trade over
$3.40 and complete corrective targets at $3.42. Additional objectives come
in at $3.47 but that should handle this current recovery. Sell into this
overhead and use a $3.50 stop. However, we need a break under $3.30 to
resume the bear slide. The July lows should be the key to our next move. At
this point, still looking for new lows.



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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