Linn Group Morning Corn Comment

CHICAGO - Nov 13/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Monday on the back of the outside markets
and very little else.  It was a very quiet day in corn today with the
December contract down almost 8 cents, but there was only a 3 cent trading
range.  The bottom line is that corn has been rallying against the historic
trend the last couple of weeks because of the increase in the outside
markets, energies and metals, so if these markets sell off, so will corn.
All the outside markets sold off very strong today and a stronger US$ pushed
the corn lower.  There was very little news out on the corn market and that
isn't expected to change in the coming weeks or months.  Corn should just
trade sideways unless there is new news that helps corn break out of the
trading range.  Volume was light/moderate and funds sold close to 5,000
contracts.  Inflation fears have helped support the corn market in the past
couple of weeks and with those fears quieted today, corn sold off.

eCBOT market was stronger overnight as some of the outside markets recovered
off the fresh lows they made in the after market on Monday afternoon.  The
US$ was weaker overnight as well which has been a catalyst for the higher
grain markets lately.  Traders also pointed to Chinese interest in the
soybean and soybean oil as being supportive to those markets and spillover
to the corn market.  Informa will release their latest 2008 acreage
estimates this morning, but it is purely guess work at this point because
the battle for acreage is just beginning.  Argentina is reportedly 70%
completed and reports out of Brazil have them exporting 11.0 mmt of corn
this year vs. 6.0 mmt in 2006.  Weather in So. America remain pretty benign
but there is some talk of dryness moving into some areas, but not the big
soybean and corn production areas.  We look for the corn market to open
stronger today and look at the outside markets and investment funds for
direction.  While the metals have recovered off the lows overnight, crude
oil is still down over $1 this morning.  Remember, corn cycles and seasonals
seem to be happening earlier than years past with the lows coming in late
Aug, mid Sept and last year corn rallied over 80 cents from Nov to Feb.  It
probably doesn't rally that much this year because of the higher starting
prices, but the battle for corn and bean acres is just beginning and futures
prices will determine the winner.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 381^6    2^6                   382^0    376^6

ZCH8                399^0    3^0                   399^0    393^6

ZCK8                409^0    2^6                   409^0    404^2

ZCN8                417^0    2^0                   417^0    412^4

Early Opening Calls: 2 to 3c higher

Top News

-- 10:30 AM Informa expected to release November acreage estimate for corn
soybean & wheat.

-- Weekly Grain Export Inspections released Tuesday delayed due to Vet's
Holiday

-- Weekly Crop Progress released Tuesday delayed due to Vet's Holiday

-- USDA pegs farm-gate prices at $6.10/bu for wheat, $3.50 for corn, and $9
for soybeans - setting new records

-- Argentina's Ag Ministry estimates corn planting is 76.4% complete, +6.4%
ahead of last year's pace at this time

-- October Chinese soybean imports over +25% higher than Oct of '06 - 2.85
mil tons total - setting a new record for the month of October. Chinese corn
exports increase dramatically over the same time last year; currently 210k
tons through October, acc. to customs data.

-- Dalian Corn futures off 8 Yuan/mt to 1768 Yuan/mt

-- eCBOT Corn Vol: 171,263; Pit Vol.: 46,028; Open Interest change: -5,228

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. Showers will exit the eastern Corn Belt later today

-- Outside markets: Energy complex: crude off $1 to $93.62; Gold & Silver
both slightly higher; US $ lower vs. Euro, slightly higher vs. Yen.

Cash Markets

--CIF Corn up 1-2. Nov. +58 to +60, LH Nov. +60 to +62, Dec. +61 to +64,
Jan. +49 to +52, Feb. +49 to +52, Mar. +50 to +52, A/M +40 to +43

TREND:

There was a general "get me out" feel to trade overnight and again today.
There was not an extreme reaction to any spot news but the firming of the
$US was certainly a warning sign for those that had been buying crude, gold,
and grains due to dollar denominated values.

We remain negative wheat vs. corn. That chart is shown at the right below.
The bounce has been relative small considering what has happened over the
life of the spread. Stay with it. Last week I recommended bear spreading
Z8/N8 wheat in Chi in response to growing wheat acres in the US as well as
around the world. I continue to believe in this spread but as one has to
recognize in wheat recently---better safe than sorry---sorry can be real
expensive when there is not anyone offering when you want out of a spread.
One more bad close on this spread and I will be looking to move back to the
sidelines?

Corn has scaled down consumptive [pricing that will develop over the next
few days on weakness. My recommendation is that 3.70 to 3.60 represents
opportunity if given the chance over the next week or 10 days. May be early
but this market is tending to show more of a positive trend and waiting for
the ideal purchase could find you waiting, and waiting, and waiting???

Lot of talk about what corn/bean spreads has to do to get the acres needed?
The charts below show the relationship in two different manners. Look for
the beans to go to 2.4 times the price of corn on this move. This should be
enough to take the bean-corn spread to new highs and possibly close to $2.00
over.



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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