Linn Group Morning Corn Comment

CHICAGO - Sep 5/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed over 13 cents higher on Tuesday on the back of record
prices in the wheat.  The wheat market is the leader of the grain complex
trading just off limit very early in the session before trading limit up the
rest of the day.  Technicians pointed out as well that corn broke some key
moving averages which probably initiated some buy stops by funds.  The corn
market climbed higher on the back of the exploding wheat market even as
traders see the corn harvest coming north and yields remaining very good.
With these bigger yields, cash traders are reporting that it is pressuring
basis levels and spreads, especially in areas where there is literally corn
just laying on the ground because of lack of storage.  Different traders
said that with traders unable to buy wheat, they are buying corn and beans.
Psychologically, when you see the grain markets going higher, you need to be
involved.  Some cash traders talked about wheat users waiting to buy their
needs till the end and getting caught and with dwindling bean stocks,
traders are taking notice.  Volume was moderate/heavy with funds buying
6,000+ contracts by the end of the day.

eCBOT market closed higher overnight as once again wheat was the main player
and corn keeps rallying in front of one of the biggest harvests in history.
This rally in corn would be unusual except for the all time record rally in
wheat prices.  Regardless of how much corn is going to be harvested, it will
have to go higher with wheat just because of the sheer price of wheat.
Export inspections over the weekend were within expectations but traders
assume that exports will remain very strong when they are released before
the opening on Friday morning.  Wheat remains the big story in the grain
complex and will remain that way until the market reaches a top which is
anybody’s guess.  Corn is a currently a follower of the wheat market with
little to no new news out in the marketplace.  The crop condition report
released after the close on Tuesday was unchanged, but traders are paying
little attention to these numbers anymore and seem to be concentrating on
yields as the corn harvest moves north.  These yields remain very good.
Different traders feel that corn has no business up at these higher prices,
but you just can’t ignore wheat and the psychology of it.  If funds can’t
buy wheat because it is limit up, they are going to buy corn and beans.
Wheat is the leader and the corn will follow its movement.  When wheat
finally finds a top and breaks, corn will be right there going lower.  The
problem is nobody knows where the top is going to be and trying to project
the high is almost impossible.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                338^4    1^6                   339^6    335^2

ZCZ7                 355^2    2^0                   358^0    351^2

ZCH8                371^2    2^0                   374^2    367^6

ZCK8                381^6    2^6                   382^6    378^2

Early Opening Calls: 1 to 2c higher

Top News

-- Jordan bought 150,000 mt of feed barley in tender.

-- USDA Corn 59% good to excellent vs. 59% last week and 59% last year.

-- Despite tight supplies in China, head of the Chinese Nat'l Development &
Reform commission downplayed the likelihood China would import mass
quantities of pork & pork products.

-- Crop scout Cordonnier raised his Corn yield estimate this week to 151 bu.
per acre up 1bu. from last week. He also raised his Soybean yield ½ bu. to
41.0 bu per acre.

-- Dalian Corn futures fell in overnight trade, Jan futures -20 Yuan, active
May 16 Yuan lower

-- CBOT Deliveries: Corn 1,572

-- eCBOT Vol: 133,932; Pit Vol.: 61,737; Open Interest change: +13,186

-- Weather: Normal to Below Temps. Normal to Above Precip. The Corn Belt is
forecast to see scattered showers and thunderstorms today into Sunday.

-- Outside markets: Energy complex: crude +10c,; Gold -$2.60 & Silver 17c
lower; US $ higher vs. Euro, lower vs. Yen

Cash Markets

--CIF Corn steady off 1. Sept. +42 to +46, Oct. +56 to +??, Nov. +56 to +??,
Dec. +56 to +59, Jan. +40 to +45; J/F/M +40 to +45

TREND:

Wheat just kept going after our target was met 50 cents ago. Have no idea
how far this carries but the long terms show nothing but blue sky. Be
careful fading the rally until there is a sign. I have started to hedge up
new crop soft red but have a concern that it has to be a scale and I will
not get too big until we get some indication of a slowing of the rally in
the old crop.

Corn got awful close to filling the gap at 3.60 today and ran into problems.
I am okay with a 3.30 low but need to be patient to see what happens on this
rally. Look for demand to slow and farmer selling to pick up? At the pace
harvest is coming look for weakness in interior basis levels and more
logistic problems developing.



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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