Linn Group Morning Corn Comment

CHICAGO - Sep 7/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market moved lower again on Friday under harvest pressure and
selling in the wheat market closed wheat lower for the first time in days.
As the harvest moves north, yields continue to be very good and traders
continue to see better yields than expected.  As evidenced by Informa
yesterday when they released bigger than expected yield estimates, the
private forecasters are predicting bigger yields and so far, the southern
corn belt is backing up the bigger estimates.  Informa raised the corn
production estimate to 13.323 bil bu, 156.0 bu per acre from their August
estimate of 13.09 and 153.3 bu per acre.  The talk on the trading floor was
that it was a given that the USDA was going to raise its yield estimate next
week when they release the Sept crop report.  Volume was surprising
moderate/light and funds were net sellers of 5,000+ contracts.  Exports
remain strong and helped hold up the corn market against the huge US corn
crop.  Demand for feed grains across the world remains very strong so a big
break in corn is not expected as commercials seem to be there to buy corn
futures at every move lower.

eCBOT market was lower overnight following yesterday's sell off as traders
continue to hear about bigger yields and the private forecasters continue to
put out bigger yield estimates.  Export sales were app. 1.1 mil within the
800,000 to 1.2 mil range.  Everybody knows that exports are strong and will
remain strong with the high price of wheat, so these numbers will be mostly
ignored, especially with further sales announced this morning.  Wheat is
still considered the leader of the grain complex and traders will be
watching to see if can hold up after coming under selling pressure yesterday
and last night.  The corn market will be called lower inline with last
nights close, but wheat will be the leader.  I don't anything has changed in
the corn market.  The huge yield is competing against the huge world demand
and corn is in a range trade.  Traders will be there to sell rally's at the
top of the range and users/commercials will be there to buy the market at
the bottom of the range.  It will probably take some new news, or a huge
USDA crop estimate number next week to push corn out of its range.

LINN GROUP CROP ESTIMATE WILL BE RELEASED LATER THIS MORNING.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCU7                320^4    -2^6                  323^2    320^0

ZCZ7                 336^6    -2^4                  339^6    336^0

ZCH8                353^4    -2^2                  356^2    353^0

ZCK8                363^4    -2^4                  365^4    363^4

Opening Calls: 2-4 lower

Top News

**USDA Corn 07/08 Export Sales Net: 855,600 mln mt; expected 800,000-1.2 mln

-- 110,000 mt of corn at tender by S Korea passed Friday, cash sources say
lack of bids was reason for pass

-- Dalian Corn futures higher in overnight trade.

-- eCBOT Vol: 116,456; Pit Vol.: 47,576; Open Interest change: +997

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

-- Outside markets. Energy complex lower; Gold & Silver: both higher; US $
lower vs. both Euro & Yen after jobless data release

Cash Markets

--CIF Corn up 1 to 5. Sept. +49 to +??, Oct. +63 to +68, Nov. +63 to +68,
Dec. +58 to +60, Jan. +40 to +45 J/F/M +45 to +49

TREND:

The wheat market handled the selling pretty well today. The major changes
included Matif losing $1.25 to the US markets, KC gaining 10 cents on Chi,
and the bull spreads in general tightening. Actually appeared as if a lot of
new crop hedges had been held off waiting for a top in wheat to show and
today the country put those numbers into the trade. That was why new crop
was so much weaker than old. The level of demand on old crop wheat has the
market talking about much reduced carryout levels. This could very well be a
reason for wheat to continue to gain in flat price---it held the correction
pretty well today considering that we are trading $8.25 wheat. I would
surmise that any gains in flat price now have to come in spreads and basis
gains. Not sure that paying more for wheat futures actually guarantees cash
wheat. US fobbing capacity is booked for Sep-Oct. Talk around today that
this same situation exists in the Black Sea? To book a US cargo for Nov
might mean you have to push a corn or bean boat off berth as well? Fobbing
margins are the best in 30 years so we may see a few facilities come out of
mothball. The PNW will go back to working 2 or 3 shifts a day. Now how do we
get enough barges, rail cars etc to move interior stocks to those export
houses. Will not be easy. Do not be short wheat basis.

Corn has the harvest activity and farmer selling to hold the market
down---but world feed grains are tight and export as well as domestic demand
should support flat price on weakness---will have a hard time pushing corn
below today's lows for long. Extend user coverage into the second quarter of
the crop year at 3.40 to 3.30 scaled down---if you have not already.
Logistics here will continue to keep basis bids weak at interior points and
stronger at destinations.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.