Linn Group Morning Corn Comment

CHICAGO - Oct 16/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market moved higher on Monday on the back of the liquidation of the
wheat/corn spread and word out of the EU that they many allow importing of
GMO corn.  The long wheat/short corn spread has been a huge spread for
traders both on and off the floor and as wheat breaks down, we are seeing
the liquidation of this spread which is helping to support the corn market.
The EU rumor on the surface looks very positive for US corn, but it may not
be as the US has many different varieties of GMO corn and it is all mixed
together by the elevator.  The EU will only be approving 3 varieties of GMO
corn.  Many traders feel this story doesn't have any legs, but it may open
the door for some corn by-products and such.  Volume was light/moderate and
funds bot 7,000+ contracts by the end of the session.

eCBOT market was a little lower overnight after a rally the last 2 days has
pushed corn into new recent highs.  There is very little new news out
overnight.  China's Ag minister told reporters today that China is likely to
have a bumper crop this year even with some drought damage to the northeast
part of the country.  He said they expect to harvest 500 mln mmt of grain.
USDA reported that 53% of the crop was harvested as of Sunday which is above
last year and the 5 yr average.  Harvest looks good, but it looks like the
weather could put a damper over the next 7-10 days as rain is forecast
across most of the Midwest.  Some areas of the western belt which are
already behind, may start to experience some stalk damage which could make
corn fall to the ground and delay harvest even further.  The crop is there,
it just has to be harvested.  Outside commodities are higher again this
morning with crude making new highs and gold pushing higher.  The downside
in corn should be limited and corn should be supported by the liquidation of
wheat/corn spreads and support of the outside markets.  In other corn news,
the Philippines plans to buy 200,000 metric tons of duty-free corn in a
tender in late November for shipment early next year, a feed mill industry
official said Tuesday. Corn futures on China's Dalian Commodities Exchange
settled higher on speculative buying a trader said, with the May contract
CNY10 higher at CNY1,661/ton.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 360^4    -1^4      362^0    359^2

ZCH8                377^2    -1^0      378^4    376^0

ZCK8                386^6    -2^0      388^6    386^6

ZCN8                397^0    -0^4      397^6    395^4

Early Opening Calls: 1-2 lower

Top News

-- Harvested corn in Monday's USDA weekly crop progress report was pegged at
53%, 11 points ahead of prior week pace & 14% a head of year ago & 12%
points ahead of 5 yr average harvest pace.

-- October cattle on feed report will be released on Friday, small early
sample of analysts see On-Feed at 95-97% of year ago numbers, while
Marketings during Sept were in a range of 95-97 & placement of animals on
feedlots ranged at 105-111% of year ago figures.

-- Despite drought conditions in Northeast China, gov't official says China
could harvest 500 mln mt of Grains this year.

-- Dalian Corn futures higher in overnight trade, +10 Yuan/mt.

-- eCBOT Vol: 106,344; Pit Vol.: 27,451; Open Interest change: +5,803

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

-- Outside markets. Energy: crude futures makes new all time high overnight
at $87.97/bbl ; Gold & Silver: both lower; US $ slightly higher vs. Euro,
lower vs. Yen.

Cash Markets

--CIF Corn steady up 1 . Oct. +60 to +??, Nov. +63 to +65, Dec. +63 to +66,
Jan. +51 to +?? J/F/M +51 to +54

TREND:

The inter-market spreading took CZ up to first major resistance at 3.60 to
3.65. It is time to be less positive to prices at these levels. The
condition reports are not important to me but could be a catalyst for weaker
trade tonight? Did a little more bull spreading in corn to roll short hedges
forward to H, K, and N today.

Wheat is a dead duck. Do not look for much rally potential here. Starting to
act more like a bear market with the inter-commodity and carry spreads
looking more like a bear market. Look for WZ to test 7.50 quickly. Pricing
will make this a choppy down side trade with small selling opportunities.
The other side of this is the corn/wheat spread that also shows signs of
wheat with more down side ahead.



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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