Linn Group Morning Corn Comment

CHICAGO - Aug 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed a little higher on Friday after Informa released
their crop estimate earlier in the session and the forecast for hot weather
in the next couple of weeks.  The December contract closed slightly higher
about in the middle of the trading range on very light volume and light fund
activity.  The volume on Friday was the lowest all week and funds were net
buyers of 1500 contracts.  Nothing has really changed for the corn market as
it remains very active and very choppy.  The Informa estimate was below its
last estimate, but above the USDA estimate.  The crop looks good and the US
looks to harvest one of the largest crops of all time.  On  the other hand,
demand for corn remains huge and only getting bigger if the last couple of
weeks export sales continue.  The corn market now turns to the release of
the Aug 10th USDA crop report.  Corn is still a weather market, but demand
will be the driving force behind price fluctuations as the US exports record
numbers of bushels.  Corn is currently in the kernel filling stage of
development when a good crop can become great or stay good.

eCBOT market sold off overnight on the better than expected rains that fell
across the northern portion of the corn belt with some of the driest areas
of the western belt receiving good rains.  These rains remain in the
forecast for most of the week with the northern areas of the western corn
belt getting the best opportunity for rains.  The corn market should remain
choppy as the market wrestles with the different forecasts.  The 6-10 and
8-14 day forecasts both are pointing back to hot/dry conditions so areas not
receiving rains this week could be hurting in a week or two.  The rains are
more important for the beans than the corn, so beans will be the leader
lower on the rains, but the rains will still help some late developing corn
in the northern areas and it will help fill kernels.  The Goldman Roll
starts today and you will see traders start to position themselves for the
release of the USDA production report on Friday before the opening.  The
corn market should open up in line with the close overnight and different
traders I talked to this morning look for it to find some buying 7-10 lower
as demand remains very strong even with the huge crop that will probably be
harvested this fall.  Beans will be the leader in the grain complex, and
corn will be a follower, so keep an eye on the bean complex for direction.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                319^6    -6^6                  323^4    319^2

ZCZ7                 336^0    -7^0                  338^6    335^4

ZCH8                352^0    -6^6                  353^0    351^0

ZCK8                362^0    -6^6                  365^0    361^0

Early Opening Calls: 6 to 8c lower

Top News

-- 6 month harvest of total Philippine corn pegged at 2.7 mln mt, 5 1/2%
higher than year ago production, but below this year's estimate of 2.9 mln
mt, as dry weather hampered some areas.  Philippine gov't suggests it may
import 200,000 mt of corn to help with its production target shortfall.

-- US sorghum exports pegged at 735,000 mt in the 06/07 MY, up from the
65,000 mt of US exports to Europe.  Analyst note the price differential to
wheat imports for feed importers.

-- Dalian Corn futures 13-18 Yuan higher in active Jan & May contracts.

-- eCBOT Vol: 93,969; Pit Vol.: 30,900; Open Interest change: -4,545

-- Weather: Above Normal Temps. Below Precip East, Normal to Above West.

-- Outside markets. Energy: crude $1.10 lower, products lower ; Gold $1
lower & Silver: 3c lower; US $ lower vs. Euro & Yen

Cash Markets

--CIF Corn firmer up 3 to 6.  Aug. +54 to +56, LH Aug. +54 to +??, Sept. +57
to +60, Oct. +45 to +48,Nov. +47 to +50, Dec. +48 to ??, Jan. +38 to +40

TREND:

Wheat has not changed its stripe---a bull market by anyone's measure. Be a
buyer on 10 cent breaks

Corn is also a developing trade---into first level of resistance at 3.42 to
3.47. Not sure how far it goes but the market is nervous about a bigger
rally in wheat so afraid to sell corn too hard.

Declining crop conditions expected to underpin the market on Monday. Look at
the Sunday forecast for an idea on price action Sun night.



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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