Linn Group Morning Corn Comment

CHICAGO - Aug 10/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn sold off on Thursday along with all the other commodities as world
markets were lower as the French government froze the assets of 3 hedge
funds.  Most of the commodity and stock markets sold off yesterday on
overall worry about risk and many traders cut some positions.  Corn was also
lower on many traders taking profit before on the USDA report this morning.
The corn market has moved higher this week because of hot/dry weather in the
central/southern corn belt.  Traders started to talk about the yields coming
out of the southern states being better than expected, especially in some of
the very dry areas, and that helped push corn lower yesterday.  Wheat
reached new highs early in the trading session only to sell off late in the
day and that helped push corn lower on the close.  Remember, corn is a
follower in the grain complex and will look for direction from corn and
beans.  Bottom line is the release of the USDA report this morning.

eCBOT market was lower again overnight on light volume as the market awaits
the release of the USDA report.  The USDA released their production estimate
at 13.054 billion bu at a average yield of 152.8 bu per acre.  See all the
details and numbers below.  At first glance, the higher bu. per acre is
negative the corn market and I think that is what traders were looking at
for the August crop estimate.  I think different traders were set up short
into this report and now they will look to press it lower.  On the other
side, demand was raised in this report and exports should remain strong, so
this becomes a battle between the supply side and the demand side of the
market.  By raising yields and raising demand, the ending stocks number
remains unchanged and some will consider this bullish, especially in the
back months, like December 08 corn.  Traders will also discount this report
some because you have to remember, these estimates are based on the crops as
of August 1st and many traders think we have see some changes for better and
worse in the last 10 days.  After the market digests the USDA report,
traders will turn back to weather and the forecast in the coming weeks.
Calls will be lower this morning and traders I talked to think corn will
come under pressure and they will look to wheat for direction as the new
highs need to be fed or we could see a breakdown.  Outside markets are
negative and could carry over to the grain markets.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                328^4    -3^6                  331^2    328^0

ZCZ7                 345^0    -3^6                  347^6    344^4

ZCH8                359^6    -4^6                  363^0    359^4

ZCK8                369^2    -4^0                  371^4    369^2

Post Report Opening Calls: 3 to 5c lower

Top News

**US August Corn 07/08 Crop Prod: 13.054 bln bu.; est. 12.91 bln bu.; July
Rpt 12.84

**US August Corn 07/08 Yield: 152.8 bu/ac; est. 151.2 bu/ac; July Rpt 150.3
bu/ac

**US August Corn 07/08 Carryout: 1.516 bln bu. ; est. 1.51; July Rpt 1.502

**US August Corn 06/07 Carryout: 1.137 bln bu. ; est. 1.13; July Rpt 1.137

**August China 07/08 Corn Output: 148  mmt; July Rpt 148.0

**August Argentina 07/08 Corn Output:24.0  mmt; July Rpt 24.0

**August S Africa 07/08 Corn Output: 10.5 mmt; July Rpt 10.5

**World 07/08 Corn Carryout: 102.23 mmt; July Rpt 108.4

-- China's Ag Ministry released a statement that said grains lost to drought
were already above normal so far this year.

-- Elevator group in central Illinois 3 county survey estimates corn yield
at 190.57 bu/ac in this summer vs. last year's 182.1 bu/ac.  The survey
included 140 fields from around the McLean, Tazewell & Woodford counties,
and was conducted by Bell Enterprises.

-- Russian ag ministry says through Aug 7 28.4 mln mt of grain have been
harvested vs. 21.8 mln mt harvested through same time period year ago

-- Thursday saw 239,500 mt of Hungarian corn offered into EU intervention
resale.

-- Strain of mild bird flu in Nebraska poultry prompts Japan, Philippines,
Russia & Turkey to halt imports.

-- "Greater than 50%" chance of La Nina forming during peak hurricane
season, acc. to NOAA

-- Syngenta GMO corn seed approved for feed use by Japan's Food Safety
commission

-- Dalian Corn futures lower in overnight trade.

-- Funds sold 5,000 Corn contracts Thursday

-- eCBOT Vol: 187,336; Pit Vol.: 56,377; Open Interest change: -13,277

-- Weather: Above Normal Temps. Below Normal Precip. Most of the  eastern
and central Corn Belt will be dry today into Monday.

-- Outside markets. Energy: crude 84c lower, products lower ; Gold $2 lower
& Silver 5 1/2c lower ; US $ higher vs. Euro, lower vs. Yen.

Cash Markets

-- CIF Corn up  2 to .  Aug. +52 to +55, Sept. +55 to +60, Oct. +49 to
+50,Nov. +49 to +52, Dec. +52 to +55, Jan. +37 to +40

TREND:

USDA crop report will decide the direction.



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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