Linn Group Morning Corn Comment

CHICAGO - Sep 20/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was supported by the unwinding of the wheat/corn spread as
wheat sold off and corn rallied.  The December corn rallied off early lows
in the session to close 11 cents off the lows with some traders also
crediting technical buying as helping the rally.  The biggest rally came in
the unwinding of the spreads as traders decided that wheat had made a top
for the interim and they wanted to take profit.  No real big news out again
yesterday as traders try and digest the huge US crop, but it seems that
commercials are there to support a break in the corn market every time
traders try and push it lower.  Harvest weather remains excellent and
harvest is ahead of schedule as the cold weather last weekend in the
northern areas had very little affect on the corn market.  In Illinois, the
2nd largest corn producing state, farmers are reporting yields 10-20 bu
higher than average, thus pushing traders to the USDA raising its forecasted
corn production.  Funds were active buyers of 4,000+ contracts on
light/moderate volume.  Some traders I spoke to said funds are not only
unwinding the wheat/corn spread, but also shifting money out of wheat longs
and into corn.

eCBOT market finished very strong in the last hour of trading as we had some
new news help push the market higher.  China National Development and Reform
Commission issued statements on their website encouraging corn imports and
they would have very tight stocks by 2010.  Traders now think this statement
may confirm rumors that their production is a lot lower than they have
previously announced and the USDA forecast.  The December contract closed
almost 6 cents higher after trading unchanged almost the whole night
session.  This news has been in the back of traders minds, but this is the
first time China has publicly made a statement.  Export sales were very
strong again this week.  Analysts estimated weekly exports at 900,000 to 1.3
mil and actual sales were 2.032 mil which should help support corn this
morning.  After talking to traders this morning, the Chinese announcement
isn't breaking news, but the rhetoric out of China which is famous for not
giving the market anything, is important.  This supports information that
traders have been discussing for the last couple of months.  Corn should
open stronger this morning and look to see if it gets extended fund buying
and to see if it can chase some of the shorts out of the market.  Wheat is
probably not the leader on rallies anymore with the new news out this
morning and corn is going to try and break out of its recent range.  Harvest
pressure should limit corn rallies, but remember the fall of 2006 before
shorting corn.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 364^0    5^6                   366^6    357^0

ZCH8                380^0    5^2                   383^0    372^4

ZCK8                390^4    6^0                   391^0    384^4

ZCN8                399^0    5^4                   400^4    392^2

Early Opening Calls: 3-5 higher

Top News

**USDA Corn 07/08 Export Sales Net: 2.032 mln mt; expected 900,000-1.3 mln--
46,000 mt of Non-GMO corn bought by S Korea in the overnight markets, origin
was optional.

-- Argentine gov't keeps 07/08 soybean production steady at 47.6 mln mt from
prior months estimate.

-- Argentine gov't ups 07/08 corn acreage to 3.95 mln ha from 3.90 mln ha
from prior months estimate.

-- Expectations of stagnant Chinese corn production, the Nat'l Development
committee in a statement said it encourage imports of corn & throttle back
the use of corn for biofuels production

-- Soybean import duties in China maybe cut to 1% from the current 3% duty,
according to official from the Chinese Finance ministry

-- Indonesian government estimates peg the country's corn production this
year at 13.5 mil tons, which is +13% more than last year's production; loans
to farmers to encourage production have paid off

-- Oct 1-Jan 1 grain export quota proposed by Ukraine gov't according to
deputy Prime Minister, 1.0-1.2 mln mt feed grain quota suggested

-- Dalian Corn futures lower in overnight trade

-- eCBOT Vol: 96,366; Pit Vol.: 27,043; Open Interest change: +5,384

-- Weather: Above Normal Temps. Above Normal Precip. The Corn Belt may see
some scattered showers in the northern regions today.

-- Outside markets. Energy complex lower; Gold & Silver: higher; US $ lower
versus Euro & Yen

Cash Markets

--CIF Corn up 1 to 9. LH Sept. +46 to +??,Oct. +55 to +58, Nov. +56 to +60,
Dec. +56 to +60, Jan. +44 to +?? J/F/M +45 to +48

TREND:

Wheat put in a gap lower again off the test of the highs earlier this week.
Should see selling pick up unless there is a reason for pricing to
surface---Egypt, Paki, or Turkey tenders. However, Black Sea offers appear
to compete with US wheat fairly aggressively---with a lot cheaper freight

Pricing supporting corn more than expected? Harvest is there with activity
growing. Many areas switching heads to cut beans so may be overestimating
the farmer selling in corn for a while? Clear skies for the coming 5 to 7
days should keep pressure on corn and beans both?



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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