Linn Group Morning Corn Comment

CHICAGO - Aug 14/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market ended slightly lower on Monday after opening stronger as the
corn market didn't have any data to hold the gains.  Any rally in the corn
market is going to be met by selling because of the huge crop that is to be
expected.  Any big selling in the corn market was muted with beans being
higher.  Remember, corn is the follower in the grain complex.  The rain
continues to avoid most of the central and southern areas of the grain
complex, but this is probably putting more stress on the beans than the
corn.  Traders also starting to hear of great yields from some of the early
harvested corn, which isn't unexpected, but still will be looked at as
bearish corn.  Exports remain strong and it is helping keep corn higher as
the USDA reported weekly inspections in the middle of the analysts
estimates.  Traders also said corn was supported by the expectation of lower
crop ratings when released after the close.  Cash traders reported very
little movement and basis levels remained unchanged.  Volume was
light/moderate and funds were net buyers of 3,000+ contracts.

Overnight market closed a little lower after the better than expected crop
condition report released after the close.  The market was expecting a 1-2%
decline in the good/excellent from last week and some traders thought we
could see a 3% decline.  Well, the USDA reported the good/excellent at 56%
which was unchanged from last week vs. 57% last year vs. 61% on average.
This number was looked as mixed by traders and the reason for the corn
market selling off early in the night session.  The weather remains hot in
the southern areas and rain continues in the north.  This has a bigger
affect on the bean markets, but traders will still apply it to the corn
market.  Wheat was up over 15 cents in the September overnight, thus helping
corn recover from its earlier sell off.  Wheat is the leader in the grain
complex and it will help prop up the corn market or at the very least,
discourage traders from selling corn aggressively.  With strong demand and a
strong wheat market, corn should chop around, even with a record large crop
starting to be harvested.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7               331^0    0^0                   332^0    328^4

ZCZ7                348^2    -0^6                  349^4    345^6

ZCH8               362^0    -2^2                  365^0    361^6

ZCK8               373^6    -0^6                  374^4    372^2

ZCN8               382^0    -2^0                  383^0    381^4

Early Opening Calls:  mixed/1-2 lower

Top News

-- Corn rated 56% good to excellent vs. 56% last week

-- Dalian Corn futures were slightly higher in overnight trade, Jan futures
up 4 Yuan.

-- eCBOT Vol: 132,629; Pit Vol.: 54,931; Open Interest change: -6,026

-- Weather: Above Normal Temps.  Below Normal Precip. The Corn Belt will see
scattered showers and thunderstorms today

-- Outside markets. Energy: crude 45c higher, products 110 pts higher; Gold
& Silver both lower; US $ up against the Euro, lower vs. the Yen.

Cash Markets

--CIF Corn  firm up 2. Aug. +53 to +59, Sept. +56 to +60, Oct. +50 to
+50,Nov. +50 to +??, Dec. +52 to +56, Jan. +37 to +41

TREND:

Corn will still be a laggard. The trade seems trapped in a fairly tight
range of 3.30 to 3.60 in CZ---or if you want to tighten it a little---look
for the market to extend the direction when we get below 3.40 or above 3.60.
There is a problem with corn. The southern harvest continues to put a few
bushels into the cash pipelines. This harvest will extend north into the
southern Midwest by the end of next week. Full fledged harvest starting in
southern Ill in 10 days?  This along with the overhead on the weekly and
daily charts makes it really tough to see the market extend gains. Would
seem to me to take a big event?

Wheat that event? Not sure. But the market does not seem ready to quit.
Could be the catalyst one more time that tugs corn and beans into a big
technical trade? Chi wheat to 7.50 appears to be the magnet. Some said the
deferred strength in Jly 08 today was a result of heat and dry conditions
limiting fall wheat planting. Not sure I agree at this point but it did
affect both Chi and KC. Seems very early for that concern. Instead see the
spreads reacting to widening carries.



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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