Linn Group Morning Corn Comment

CHICAGO - Sep 21/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market finally got some bullish news and reacted to it on Thursday
with the December contract making new 3 month highs and closed 11 cents
higher after being up 16 cents.  It was a combination of the news out of
China that they may import corn in the future, strong technicals, and fund
buying.  All these factors were against the huge US crop coming to harvest.
Chinese supplies remain tight, accelerating inflation, and production is not
able to keep up with demand.  This isn't really anything new to the market
place, but it was voiced by the Chinese government which is usually very
tight lipped.  The US dollar made new lows against other major currencies
making US grain that much cheaper for import.  Volume was large and funds
were very active buying 12,000+ contracts by the end of the day as some
traders said funds were outright buying corn and also switching some longs
out of wheat and into corn.  Traders also said corn was supported by further
liquidation of the wheat/corn spread that started earlier this week.  Weekly
exports remain very strong, almost double the estimate as the weak US dollar
and worldwide need for corn remaining strong.  The US harvest remains very
strong and the weather is almost ideal, but the market seems to be eating up
the new grain as one cash trader said farmer sales are very strong and there
was big commercial activity yesterday.

eCBOT market closed a little higher overnight after yesterday's rally into
new 3 months highs.  There wasn't any new news out overnight, but traders
continued to discuss the Chinese announcement yesterday about importing
corn.  The general consensus seems to be that China is not going to be
importing corn this year, but in the years going forward.  Wheat was
stronger overnight bucking the general consensus that wheat is due for a
break.  October option expiration today so there could be some action
because of that, but most of those traders already got burned this week with
corn moving 25 cents off the lows.  Today is in important day for corn as
this is a very strong weekly close if we stay higher.  The corn market
should open higher this morning on the back of yesterday's rally, but
harvest pressure and profit taking could take the market lower.  Funds
should be the key to the corn market today and if we see further wheat/corn
liquidation, that should help support the corn market.  Without fund buying
the corn market is probably a two sided trade today but there could be some
harvest selling late in the day in anticipation of weekend farmer sales.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 371^4    2^2                   372^0    367^6

ZCH8                387^0    1^6                   387^6    384^0

ZCK8                395^4    1^0                   396^0    392^2

ZCN8                405^0    1^4                   405^0    402^0

Early Opening Calls: 2-3 higher

Top News

-- Chinese Nat'l Development committee says they've expects to offer
commodities such as pork, corn & soyoil from state reserves to help curb
inflation.  Committee members expect 1-3 mln mt of Corn to be released &
nearly 200,000 mt of veg oil

-- Chinese Nat'l Development committee says they've lowered import duties on
Soybeans beginning Oct 1 to 1% from the current 3%

-- Zhu Yufeng, general manager of Louis Dreyfus's Beijing office, said
China's overseas purchases of soybean may reach 34 million metric tons next
year from 28.5 million tons this year

-- The PBoC set the overnight repo rate at 4.20% from 3.78 previously and
the 7 day repo rate was set at 6.9510% from 6.6700 yesterday.

-- Informa pegs 2008 US Corn acreage 4.7 mln acres lower; 2008 Corn acres =
88.2 mln ac

-- Dalian Corn futures mostly higher in overnight trade.

-- eCBOT Vol: 168,011; Pit Vol.: 47,323; Open Interest change: +12,677

-- Weather: Above Normal Temps. Above Normal Precip. Most of the Corn belt
will be dry today into Sunday.

-- Outside markets. Energy: crude complex lower, Nat gas lower; Gold &
Silver: both higher; US $ rebounding slightly from yesterday's slip to
record lows

Cash Markets

--CIF Corn up 1 to 3. LH Sept. +48 to +??,Oct. +57 to +59, Nov. +57 to +60,
Dec. +59 to +62, Jan. +46 to +??; J/F/M +47 to +49

TREND:

Have to believe the wheat market is showing cracks---unable to extend
rallies and not very willing to press weakness. I have been lucky at selling
early rallies and taking profits on part of the sales the last couple of
days. I have tried to put some new crop hedges in old crop wheat as the
spread are showing the cracks more than flat price. Feel this is the reality
of the market and points a direction for at least a hard down side
correction.

The corn/wheat and KC/Chi spreads are also flashing the same signals.

The corn market continues to try to break out of the recent trading range.
Made a great effort today based on continued commercial pricing as well as
the spec trade buying the market on stops as it cleared the Aug highs. Gap
action is impressive but has to be confirmed. It is harvest and unexpected
weakness tomorrow could make it just as negative as it was positive today?



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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