Linn Group Morning Corn Comment

CHICAGO - Sep 4/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed unchanged Friday after spending most of the day
higher.  Wheat is the leader of the grain market and after it sold off late
in the day, corn followed it lower, but it was a quiet day in the grain
markets, especially late in the day because many traders on and off the
floor were gone by noon for the long weekend.  Some of the sell off was
attributed to fund selling before the end of the month.  One corn broker in
the pit asked and received an extended closing range because of the sheer
volume of orders he had to do on the close.  The yields out of the southern
corn belt remain good and should help pressure corn even with wheat prices
continue to remain strong.  Some traders on Friday afternoon, the sell off
late in the day may have been exaggerated.  Traders are now focusing their
attention on So. America as the corn and bean crop remain very important and
that area needs some rain before farmers can start to plant.  Volume was
light on Friday and funds were only buyers of 1,000 contracts by the end of
the session.

eCBOT market was higher overnight on the back of the wheat market.  India
was the big story, buying close to 800,000 tones of wheat after traders were
expecting anywhere from 150,000-400,000.  This pushed wheat to limit up
overnight and corn followed it higher.  Volume was pretty active overnight,
but that isn’t unexpected after a long weekend.  Harvest pressure continues
to keep a lid on a big rally in corn, but if wheat continues to go higher,
corn will try and keep up.  The corn market is under pressure from harvest,
but as wheat keeps rallying, corn will have to go higher or at least it
won’t break.  Remember the wheat/corn trade is a big trade and some traders
have been fading the trade, buying corn and selling wheat and they are going
to be in trouble today.  Every trader talks about fading rally’s in corn
because of the big harvest, but if wheat remains strong, eventually traders
aren’t going to care about the big harvest and corn is going to shoot
higher.  Remember, if wheat stays limit up today, traders are going to look
for something else to buy and that is going to be corn.

 eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                326^0    2^0                   330^0    324^6

ZCZ7                 344^0    4^0                   346^6    341^4

ZCH8                359^4    3^4                   362^2    356^6

ZCK8                369^4    3^4                   370^0    366^4

Early Opening Calls: 3-5 higher

Top News

-- Grain Export Inspections to be released this morning, delayed due to
Labor Day holiday.

-- USDA Crop Progress report expected at 3pm CDT, delayed due to Labor Day
holiday.

-- Exports: Indonesia bought 20,000 mt. Thailand Corn for Sept.

-- Exports: China bought 50,000 mt. Indian Meal

-- CBOT Corn Deliveries: 555 thru 8/28/07

-- Commitment of Traders report with Options as of August 28: Corn Long
163,791 up 6,560

-- Dalian Corn futures higher in overnight trade, Jan 1 Yuan higher; May 16
Yuan higher

-- eCBOT Vol: 108,782; Pit Vol.: 47,192; Open Interest change: -2,685

-- Weather: 6-10 Day Forecast: Above Temps East, Below West. Above Normal
Precip. The Corn Belt will be dry today.

-- Outside markets: Energy complex: crude 33c lower, gasoline lower, heating
oil higher ; Gold 20c lower & Silver 7c lower; US $ higher vs. Euro, lower
vs. Yen

Cash Markets

--CIF Corn up 1-3 Sept. +57 to +62, Oct. +57 to +60, Nov. +56 to +60, Dec.
+56 to +60, Jan. +40 to +45 J/F/M +40 to +45, A/M +?? To +40

TREND:

December Chicago wheat posted new contract highs on Friday at $8.05,
however, this market finished the session 29 ½ cents off the highs and 9
cents lower for the day. Another round of profit taking triggered by the
late sell off could carry Dec wheat lower post Labor Day. This leaves the
$7.30 to $7.40 area as initial support for this volatile trade. Time to move
to the sidelines with downside risk as great as the topside at these levels.
Dec KC also posted a downside hook reversal on Friday. Look for support
between bottom of the gap at $7.14 and $7.00. The kwz-wz finished at 44¼.
Look for a bounce inside of 40 to trigger a major recovery in the spread.

Corn finished a down week with a sloppy weekly settle. Dec corn should
settle into the $3.25 support level next week, overhead resistance will be
$3.50. This is a range trade with $3.25 support and $3.50 resistance, fade
the swings until we can close outside of those levels but momentum has
shifted back to a weaker posture.  Look for short covering at $3.25. March
is also into key s/t trade and support at $3.50 – $3.40 play for a bounce
from there as well. Topside should be in the $3.65 to $3.70 area.



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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