Linn Group Morning Corn Comment

CHICAGO - Aug 9/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The hot weather in the central and southern Midwest helped push corn higher
as well as beans rallying over 15 cents on the same weather forecast.  A
high pressure ridge has developed over the central and southern Midwest
blocking rain and temperatures in the upper 90's and 100's.  The northern
Midwest has been receiving big rains which will help with some of the damage
of the southern areas, but remember, just 2-3 weeks ago, the central and
southern areas were the garden spot of the Midwest.  Some traders pointed to
a technical breakout in the corn early in the day and when the other markets
held the initial higher move, corn rallied.  Volume was large and the funds
were buyers on the day, over 7,000 contracts by the end of the day.  The
rally the last couple of days is kind of unusual in front of the USDA
report, but some traders are covering their shorts before the report as well
as the fund buying.  Some of the bigger volume was part of the Goldman Roll
as we are in the middle of that trade.  The Midwest basis bids were mixed as
interior levels were firmer, but river values were lower.  Very little
farmer selling noted recently.

eCBOT market was unchanged overnight as I would expect to see a quiet day
and choppy trade in front of the release of the USDA report tomorrow before
the opening, but then that is what we have been thinking all week.  The
weather is the driving force behind most of the price action in the corn
market right now as many traders feel the positioning has been done by the
bigger traders in front of the report.  Wheat remains strong and will pull
corn higher as it pushes into fresh new highs almost every day.  The
wheat/corn spread is still a big trade and can push corn either way
depending on if the funds are adding to the position or liquidating.  The
bottom line is the USDA report tomorrow morning and us getting through the
report.  Remember, tomorrow's report is at best an educated guess because
there is still a lot of crop development left and yields can still swing
quite a bit.  When the stocks are as low as they are and the demand is as
great as it is, any shock to the yield estimate could cause big volatility.
I would expect corn to open mixed/higher and look for direction from the
other grain markets, especially wheat.  Everybody we talk to wants to sell
rally's in the corn, but are afraid because of wheat.  Then again, this
could be a set up.  Remember, when everybody starts talking about doing the
same thing, sell rally's in corn, the market usually bites back.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                341^0    0^0       341^4    337^4

ZCZ7                 357^6    -0^2      358^0    353^6

ZCH8                373^0    -0^4      373^4    369^6

ZCK8                383^0    -0^2      383^0    380^0

Early Opening Calls: steady 2c higher

Top News

**USDA Corn 06/07 Export Sales Net: 311,900 MT; 07/08 Export Sales Net:
1.024 mt; expected 700,000 - 1.100 mln

**Export Sale: USDA reports private sale of 111,264 mt US Corn for 07/08
delivery to Mexico

-- Slightly higher chance of La Nina conditions in the next couple months
forecast by National Weather Service
-- Dalian Corn futures higher 2 Yuan in active Jan contract
-- eCBOT Vol: 194,474; Pit Vol.: 71,368; Open Interest change: -20,417
-- Weather: Above Normal Temps. Below Precip East. Normal to Above West
-- Outside markets. Energy: crude $1.30 lower, products down; Gold sharply
lower $14.50 & Silver 43 to 45c: ; US $ higher vs. Euro, lower vs. Yen

Cash Markets

--CIF Corn off  2 to 7.  Aug. +50 to +54, Sept. +52 to +57, Oct. +45 to
+48,Nov. +46 to +49, Dec. +49 to +51, Jan. +36 to +39

TREND:

The market managed the magic $7.00 trade in wheat today. Look for a more
mundane trade tomorrow waiting to see the crop report on Fri AM. If wrong,
the rally could continue---there is no top yet in sight. World users
continue to appear to be "short bot" so that small breaks will find lots of
pricing. A bullish report could be the crowning glory that gives some sort
of blow off to the top side.

Corn is showing the "demand feature" that I have talked about for so long.
Look for a lay day tomorrow but even a big crop est may not cool things
off---I suspect we will develop a 3.60 to 3.20 range trade but we have yet
to establish the top end of the range?

Beans have a similar situation. Lot of user pricing under meal but not sure
they will chase the market higher? Look for support on a $5 to $10 break but
meal should have problems at 245-250 SMZ. Beans same situation?

To discuss this report further or for specific trade ideas please contact me
directly.

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com
www.linngroup.com/

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