Linn Group Morning Corn Comment

CHICAGO - Oct 1/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn bears finally got the information they have been waiting for to
sell off the corn market with the USDA releasing its quarterly stock report.
Friday's stocks report at 1.303 gave the different analysts the backing they
needed to keep talking about a 2.0 bil. bu. carryover.  Analysts contributed
the increase in the stocks report to the big southern harvest being included
because of the early harvest this year.  A larger US corn crop and a
reduction in ethanol usage, and better yield potentials will allow farmers
to plant less acres of corn and more acres of beans without a big reduction
in stocks.  Corn has rallied a lot the last 10 days on little to no new
information so it was probably time to give back some information.  There
was a lot of talk about the funds reorganizing their positions in front of
the end of the 3rd quarter and I don't know if we saw that action on Friday,
but nobody knew what the funds were going to do.  Volume was moderate/heavy
and funds were net sellers of 10,000+ contracts by the end of the day.
Traders said that even with the bigger volume on Friday, the market seemed
quiet as the corn market opened just a little lower before selling off very
quickly, then trading higher before selling off later in the session.

eCBOT market was higher overnight on the back of the rally in the wheat
market and a technical bounce after Friday's sell off.  There isn't really
any new news out this morning, but exports remain strong and the yields keep
being better than estimates.  I was driving down in North Central Illinois
yesterday and saw a lot of corn stubble, more than I would expect for the
this time of the year, so it should be interesting to see what the USDA
reports tonight after the close on harvest progress.  The USDA interim
Agriculture Secretary announced that they would not be releasing any CRP
acres without penalties and he hinted that 2.0 mil of the 5.1 mil will not
be renewed this year.  This news should lend some support to the corn market
and traders said this morning they are assuming that harvest hedges were
accomplished last night.  Look for corn to open a little firmer today, but
it will be hard to rally the corn market in front of the huge harvest.  The
funds will be the wild card today as many traders expected to see wheat and
beans fund selling and corn buying and we didn't see much of that on Friday.
We look for corn to open higher but have trouble unless the funds get
involved.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 375^2    2^2                   376^4    370^4

ZCH8                391^4    2^2                   393^0    387^0

ZCK8                400^0    0^6                   400^0    399^0

ZCN8                410^4    2^6                   411^0    406^0

Early Opening Calls:  2-3 higher

Top News

-- USDA late on Friday in a press release said they would not allow for
penalty free early withdrawal of lands in CRP. Acting Ag Sec did note 2 mln
acres will expire on Sept 30 and available for planting

-- Stats Canada will release production figures on Thursday morning.
Analysts do expect major changes to crops from its last survey on July 31

-- Russian sees 79 mln mt grain production in current marketing year, also
expects exports to be near 12 mln mt, acc. to Russian ag minister

-- The Commitment of Traders report with Options as of September 25 shows
Funds: Corn Long 193,687 up 29,230

-- eCBOT Vol: 175,060; Pit Vol.: 51,935; Open Interest change: +5,279

-- Weather: Above Normal Temps. Normal to Above Precip. The Corn Belt will
see scattered showers and thunderstorms in the north today.

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

Cash Markets

--CIF Corn up 1 to 3.Sept. +52 to +??, Oct. +56 to +??, Nov. +62 to +65,
Dec. +60 to +62, Jan. +48 to +50 J/F/M +48 to +50

TREND:

Corn reversals look to be preparing for a deeper break. Look for a test of
the gap at $3.60, maybe a test of $3.50. There are just too many negatives
coming at this market. Bigger yields, reduced ethanol grind, and very active
farmer selling. Look for the spreads to start to widen out as Dec (08)
starts to defend the losing acres next year. This also fits with increased
inventories this year.

Wheat market is in a world of its own. Fund long liquidation depressed the
prices on the close today. But you just wait for the next reason for prices
to be resurrected. The problem of tight world stocks has not been fixed.
Will not be fixed until the next supply is available in Jan and than again
in April, and world demand just seems insatiable



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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