Linn Group Morning Corn Comment

CHICAGO - Aug 16/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed mixed yesterday in front of the sell off in the beans
and wheat.  The December contract closed up ¼, with the bean closing 11 ½
lower and wheat closed 14 cents lower.  It is interesting to see corn hold
its levels with the other grain markets selling off.  Different traders feel
there is value for corn at these prices and the commercials will be there to
buy breaks in corn.  The wild card is the overall fund liquidation across
all the world market including stocks and commodities.  It seems like funds
are reducing positions in all the markets to reduce their risk exposure
because of the sub-prime mortgage crisis.  Solid exports also supporting the
market with an Israeli consortium buying 100,000 tones of corn, more than
they had been tendering for and possibly only a sign of things to come in
the future.  Weather remains the same, possible showers in the northern
section of the corn belt, but the showers won’t reach the southern areas
that are still very dry.  Volume was light/moderate and funds were about
even on the day.

eCBOT market was lower overnight as we are seeing massive fund liquidation
across all markets, both stocks and commodities.  Very nervous markets today
and that is probably where some of the selling came overnight.  Corn was
unchanged yesterday, so not unusual to see it sell off overnight.  On the
plus side, export sales were once again very strong and much bigger than the
estimates.  The market estimated export sales were expected 700,000 to 1.1
mil and actual sales were 1.7 mil.  This number shouldn’t really have
surprised anybody, but it is still an impressive number and export sales are
expected to stay strong the rest of the year.  The wild card today is the
funds because the global meltdown we are seeing across the stock market and
all commodities.  How much will this drift into the grain markets?  It has
to have some affect, but grains also have their own fundamental stats.
Current weather and the forecast remains bearish beans and that will weigh
on the corn market, but these huge export sales will just show the market
that corn has value here and the breaks in corn will be supported.  Corn
will lower on the opening today off of the fund liquidation and technical
levels being broken, but I don’t know if you want to sell a lower corn
market.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                322^4    -5^4                  326^6    322^2

ZCZ7                 339^6    -5^4                  343^6    339^2

ZCH8                355^0    -5^4                  360^0    355^0

ZCK8                365^0    -5^4                  368^0    365^0

Early Opening Calls: 3-5 lower

Top News

**USDA Corn 06/07 Export Sales Net: -212,000 mt; 07/08 Export Sales Net:
+1.720 mln mt; expected 700,000-1.1 mln

-- Export Sales: 55,000 mt of US corn bought by S Korea

-- Philippines to tender for 200 TMT corn in near future

-- Chinese bar 8 US pork plants from importing pork to China, due to finding
ractopamine acc. to USDA

-- Dalian Corn futures were lower, active Jan 21 Yuan lower.

-- eCBOT Vol: 135,084; Pit Vol.: 27,209; Open Interest change: -9,774

-- Energy complex: crude $1.45 lower, products 300-400 pts lower ; Gold
$7.90 lower & Silver 17c lower; US $ higher vs. Euro, sharply higher vs. Yen

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Aug      +18/20 X          +57/60 U             +0/+10 U         +50/ U
550

Sep      +21/24 X          +59/63 U             +15/20  U        +60/ U
610

Oct/No  +32/34 X           +52/54 Z             +30/  Z            +60/ Z
610

Truck    Beans               Corn     Wheat               Meal Hi-pro
Oil

Chicago            -60 X               +2 U     -60 U

Toledo   -62 X               +7 U     -15 U

Dec ILL -40 U              -3 U                             -9 U
-275 U

 TREND:

The wheat trade today certainly did not feel like a blow-off trade, but it
has an outside day down off new contract highs. A lower opening tomorrow
could build some momentum, just have to watch and see.

The corn and bean markets certainly feel like they want to break down. As
mentioned earlier, the down side targets would be:

Bean markets still seem to be in trouble---will confirm that with a lower
trade if and when SX takes out 8.51 on a close. Got close today. Meal
weakness today shows no signs of weakening. We still need a close of the
gaps with a trade below 234.00 to confirm it. Oil was not as weak today as
we saw commercial type buying throughout the day. A new low close for this
move looks like targets would be a test of trade at 36.00 to 35.75. Weekly
charts imply a deeper break of a possible test of 35.00 to 34.50.

Dec corn traded both sides today, and is still stuck in this trading range
between 3.40 and 3.60. But it looks like it is getting ready to trade below
3.40 and set up a test of 3.25, especially after seeing how easy it was to
break off the only real rally we saw today when trade took Dec up to 3.51.



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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