Linn Group Morning Corn Comment

CHICAGO - Aug 7/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Corn closed unchanged vs. the December after being 10 cents lower early in
the trading session on the bigger than expected rains across the northern
corn belt over the weekend.  Wheat was the leader in the grain complex
hitting fresh 11 year highs as many traders look toward the magical $7.00
level for wheat.  With the difference in the prices between wheat and corn
at record levels, corn will keep following wheat higher, but probably not at
such an accelerated pace.  These higher wheat prices are pushing some users
that use feed wheat to look at corn because of the $3.50 price difference.
As one trader said, anybody would be stupid to keep feeding wheat instead of
corn at these prices.  Volume was light to moderate again on Monday and
funds were net sellers of over 2,000 contracts by the end of the session.
There isn’t any real new news out in the marketplace and weather continues
to be the dominate theme and rains falling in the northern corn belt are
helping some of the late planted acres and the filling of kernels.  On the
cash side, traders reported cash bids were steady at interior  locations,
but firmer on the river and gulf as export activity is growing.  CIF for
corn was +58 this week vs. +43 last week.

eCBOT market was very quiet overnight with the December closing a little
lower, but it only had a 2 ½ range all night.  The USDA released its weekly
crop progress report after the close and it showed corn 2% lower
good/excellent ratings.  This was right in-line with estimates and common,
historically, for this time of the growing season.  As evidenced by last
nights action, the weekly progress numbers should have little affect on the
corn market today.  Weather and wheat prices will be the main driving force
behind the price movement of the corn today.  The Goldman Roll starts today
so there will be some movement in the Sept/Dec spreads.  Another grain
analysts, Allendale, put out a crop production estimate of 12.744 or 149.2
bu per acre which is toward the bottom of the estimate range.  Traders will
start to position their positions in anticipation of the release of the USDA
production report on Friday before the opening so I would expect to see
choppy trade over the next couple of days unless wheat pulls corn higher.
Many option traders have been selling premium in anticipation of corn just
sitting at these price levels for the next month or two.  Demand remains
very strong so a big price drop should be well supported, and the crop
remains in great condition and the rains over the last couple of days is
only making some of the bad areas better.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                325^4    -0^2                  325^4    324^0

ZCZ7                 342^2    -0^6                  342^4    340^2

ZCH8                358^0    -1^2                  358^6    356^4

ZCK8                367^0    -1^4                  367^0    366^2

Early Opening Calls: mixed

Top News

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Corn Progress & Conditions Mini-Recap

Corn % Silking:  96%; 90% week ago; 96% yr ago week; 92% 5 yr avg.

Corn % Dough:  41%; 25% week ago; 40% yr ago week; 34% 5 yr avg.

Corn % Dented:  9%; 4% week ago; 11% yr ago week; 9% 5 yr avg.

Corn Crop Conditions Latest: VP= 6; P= 12; F= 26; G= 40; EX= 16

Corn Crop Conditions Prior Wk: VP= 5; P= 11; F= 26; G= 42; EX= 16

Corn Crop Conditions Yr Ago Wk: VP= 7; P= 11; F= 25; G= 41; EX= 16

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-- Monday's Weekly Grain Export Inspections, Corn:  24.517 mil bu, expected
= 36.0 mil bu, previous = 36.718 mil bu

-- After confirming its first case of 'foot & mouth' disease, the UK
announces another suspected case of the disease that is near first

-- USDA attaché in Thailand reports estimated corn production is revised
downward due to continued acreage reduction. Corn imports should increase
slightly due to a recovery in domestic feed demand, which will also limit
exportable supplies.

-- Dalian Corn futures 14 Yuan lower in active Jan & May contracts

-- eCBOT Vol: 117,123; Pit Vol.: 39,113; Open Interest change: +6,392

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

-- Outside markets: Energy complex: crude & products up slightly ; Gold &
Silver lower; US $ slightly higher vs. Euro & Yen

Cash Markets

--CIF Corn firmer up 1 to 3.  Aug. +56 to +59, LH Aug. +57 to +59, Sept. +60
to +63, Oct. +47 to +50,Nov. +48 to +50, Dec. +50 to ??, Jan. +38 to +42

TREND:

The wheat market into new highs---also new highs on wheat/corn spreads. Have
to imagine this market continuing to gain in this methodical manner---if we
turn more dynamic in a blow off nature, could put the top in --- but that
will be well above 7.00 if and when that takes place. KC lost to Chi again
today. Not sure I can explain why except for order flow. Demand stays
excellent with US wheat competitive enough to keep export sales very active.

Corn is also a developing trade setting back from the resistance at 3.42 to
3.47. Only had a short window to cover anything sold last week. Assume the
market will try to firm again overnight. But do not look for the market to
be able to extend very well.



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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