Linn Group Morning Corn Comment

CHICAGO - Sep 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Wednesday bucking the limit up move in wheat
again today.  The wheat market closed limit up for the 2nd day in a row, but
corn closed lower as traders keep hearing about great yields in the southern
belt as the harvest moves north.  Corn was 2-4 higher early in the session,
but when wheat sold off, corn sold off and didn't recover when wheat rallied
back up to limit up.  One trader down in southern Illinois said he is
consistently hearing 180-230 bu per acre yields which are very good and
better than expectations from a month ago.  A couple of different grain
analysts will be releasing their estimates this week in front of the USDA
crop report next week and many traders are anticipating bigger yields from
these analysts estimates.  The market is fighting a huge US corn crop
against huge demand and $8.00 wheat.  Last night, the wheat/corn spread
traded $5.00!!!!!!  That is just amazing.  Besides looking at yields coming
in from US harvest, traders are turning their attention to So. America and
making sure they get their crop in the ground.  Volume was moderate to large
and funds sold over 6,000+ contracts by the end of the day.

eCBOT market was lower overnight as wheat opened higher but sold off and
grain analysts started releasing their production estimates.  Wheat opened
10-15 higher to only sell off and close 15 lower.  Ag Resource released
their production estimate at almost 12.978 bil bu using 151.9 bu per acre.
FC Stone released their production estimate at 13.062 bil bu using 152.9.
FC Stone was much higher than their August estimate of 12.644 using a 148.0
bu per acre.  This is what traders were talking about yesterday as they sold
corn, estimates are going to be bigger than a month ago and they expect the
USDA to have the same type of report.  These higher estimates will help push
corn lower, but exports and demand remains very strong and that will help
support the corn market.  Looking at a December corn chart, it looks to be
in a trading range as traders will sell a higher corn market because of the
huge US crop, but users/commercials are there to buy a lower corn market.
Wheat has been the wild card lately, but so far, not even $8.00 wheat has
been able to drag corn a lot higher, but maybe it kept it from breaking.
Traders already talking about 08 corn acres with one trader saying corn
could lose 10 mil acres to wheat and beans next year which if it happened
would probably push corn up to $6.00.  Informa to release their production
estimate at 10:30 CST and The Linn Group will be releasing our estimate
tomorrow.  Corn should be lower on the opening today inline with the
overnight close.  It will probably come under pressure today especially if
wheat sells off.

eCBOT Overnight

Contract            Last      Net Change       High      Low

CU7                  327^0    -1^6                  330^6    327^0

ZCZ7                 343^0    -2^6                  348^0    343^0

ZCH8                359^2    -2^4                  364^0    359^2

ZCK8                370^4    -1^0                  374^0    369^6

Early Opening Calls: 3-5 lower

Top News

-- Export Sales: 90,000  mt of US Corn bought by Israel for delivery in
November & December

-- Production estimates of Corn & Soybeans to be released by Informa around
10:30 AM CDT

-- USDA weekly Thursday Export Sales report to be released 7:30 AM CT,
Friday, September 6, 2007, due to the Labor Day Holiday.

--US Soybean crop pegged at 2.682 bln bu for 2007 on yield of 42.4 bu/ac, US
Corn crop pegged at 13.062 bln bu on 152.9 bu/ac, according to FC Stone.  In
August they had forecast US corn crop at 12.644 & Soybean crop at 2.681 bln
bu.

-- German Ag ministry says 2007 harvest has declined by 6% to 40.9 mln mt
due to adverse weather conditions.

-- Official from Spanish Ag ministry sees 2007 grain harvest at 23.7 mln mt
up 3.4 mln from 2006 harvest. Official also says int'l grain prices will
have limited impact on consumer food.

-- Outlook on poultry positive as cheaper corn will help in 2008, says CEO
of Tyson.  However, the head of the food processor doesn't think Japan will
resume beef import this year.

-- USDA official accuses China of "digging" for "defective" US goods instead
of engaging in constructive talks about food & export safety issues & China
has not changed its import policies of beef, pork & poultry.

-- Cindy Smith named as head of USDA Animal & Plant Health Inspection
Service, replacing retiring Ron DeHaven.  Ms Smith had been head of
biotechnology dept of APHIS.

-- Crop report from Saskatchewan released Wednesday shows 44% of crops were
harvested as of Sunday, up 17% from prior week & ahead of the 5 yr average
of 31%.

-- Dalian Corn futures

-- CBOT Deliveries: Corn 1,689

-- eCBOT Vol: 148,836; Pit Vol.: 52,125; Open Interest change: -2,155

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

-- Outside markets: Energy complex: crude 45c higher, products higher ; Gold
$7.20 higher & Silver 15c higher; US $ lower vs. Euro, higher vs. Yen

Cash Markets

--CIF Corn up 1 to 4. Sept. +46 to +50, Oct. +59 to +??, Nov. +57 to +??,
Dec. +56 to +59, Jan. +40 to +45 J/F/M +44 to +48

TREND:

The wheat market is feeling a little toppy if looking at the 55 cent break
off the highs in Matif? Yet at $2.00 over Chi it has room to sell off some?
Rains in Arg are certainly a negative if they materialize as advertised
today. Jly is the short for me---if and when a top is confirmed. The world
will increase acres more than any one anticipates and the tightness will
disappear in one year.

Corn has more going for it but the problem is a top in wheat that leads to a
deep break will carry corn and beans along. Selling calls against long corn
is wise for users until we get further into harvest. Today we recommended
buying oats. We have decided that we are going on an oatmeal diet---wheaties
are getting too expensive. So are corn flakes.

Market may go overboard with improved corn yields---there are holes out
there that have to be taken into consideration. The crop is a good
crop---pay attention to the demand so that this big crop does not go to the
head and cost you money down the road?



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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