Linn Group Morning Corn Comment

CHICAGO - Nov 12/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Friday on profit taking after the run up during
the week before the release of the USDA report on Friday.  The corn moved
higher last week in anticipation of a bullish USDA report which it got in
lower production, but one trader said he thought the market was looking for
a lower stocks number than was released.  The ending stocks number was lower
which is bullish, but it significantly higher than last year so you can’t
get too excited.  The corn market closed 2 ¾ lower, well off the lows after
a late rally in beans and the outside markets helped support the corn
market.  Corn is still a demand market and it will be hard to break corn
significantly.  Volume was very heavy with a lot of spread volume as traders
are moving their positions out of the Dec07.  Traders still looking at the
outside markets because there is little to no new news out about the corn
and the grain markets are considered an inflation hedge.

eCBOT market was lower overnight as the outside markets are lower and the
US$ is stronger.  The December contract closed 5 ½ lower overnight.  Not
surprising to see a lower Monday trade after a Friday crop report,
especially with gold down over $20 and crude oil down over $1.50.  No new
corn news over the weekend, so traders will look to the other grain markets
and the outside markets.  A lot of talk that the lower US$ may have found a
bottom and that there will be a recovery which will cause some liquidation
of the commodity markets to reduce exposure, not completely cover their long
positions.  Overall, there seems to be plenty of corn to go around right now
and higher prices are not stopping users, either feed, ethanol, or exporters
from continuing to buy corn.  The corn market is in its final stages and
this will create a lull in the corn market unless there is outside news to
move the market.  Look for the corn market to open lower and test to see if
there is any support.  The metals continue to go lower this morning after
being a lot lower overnight and the crude oil is down over $1.50.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 381^2    -5^4                  385^4    380^0

ZCH8                397^6    -6^2                  402^6    397^0

ZCK8                408^2    -5^4                  412^2    407^0

ZCN8                416^0    -6^4                  421^6    415^0

Early Opening Calls: 5 to 7c lower

Top News

-- Dalian Corn futures settled 2 Yuan/mt higher at 1776 Yuan/mt in overnight
trading

-- eCBOT Corn Vol: 232,893; Pit Vol.: 62,937; Open Interest change: +4,193

-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Below
Precip. The Corn Belt will see scattered showers and thunderstorms today and
Tuesday.

-- Outside markets. Energy: lower $1.43 at $94.91/bbl, products lower; Dec
Gold sharply lower off $25 & Silver: off 64c to $14.90; US $ sharply higher
vs. Euro, sharply lower vs. Yen.

Cash Markets

--CIF Corn steady. Nov. +57 to +59, LH Nov. +58 to +60, Dec. +60 to +63,
Jan. +49 to +52,

Feb. +49 to +52, Mar. +50 to +52, A/M +40 to +43

TREND:

There is no doubt that the weak $US has been instrumental in much of the
speculative interest in owning commodities.

There has been all too much correlation to the trade. There are some signs
that the break in the $US has gone far enough. If this trade starts to
stabilize and rally some, it could lead to a wholesale long liquidation of
some of the heavily overbought futures trade in commodities without a
corresponding bullish fundamental outlook. Take note if long crude oil or
derivatives.

Wheat got a bit of a bounce off the important 7.50 price level in Chi. There
is also a bit of a weather trade developing in minds of hard wheat traders.
Chi is a dead duck---want to be bear spread the Z8/N8 spreads in Chi looking
for the major increase in acres coupled with very good growing conditions so
far to keep pressure there. This spread has bounced some this week on Bear
spreading of N8/Z7. Take advantage.

Corn continues to be just a little stronger than I anticipated. The $4.00
level appears to be a magnet. Some users just have not been able to get the
ownership wanted coming out of harvest. Firming basis levels have led to
some of the gains in futures. We stepped into the first new crop 08 hedges
at 4.35 CZ8 this week. This is not without fear but we have not sold any
beans yet---that market should still be a leader to the top-side



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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