Linn Group Morning Corn Comment

CHICAGO - Dec 6/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed unchanged on Wednesday as traders pointed to little
to no new news and a light two-sided trade.  The corn market was higher
earlier in the day but traders said the market failed technically after it
couldn’t make new highs after Tuesday reaching new 5 ½ month highs.  Traders
also pointed a lower crude oil market and a stronger US$ has helping put
selling pressure on the corn market.  The Soymeal was stronger and that
helped support corn, but really the corn market was looking for news and
there just wasn’t anything new.  Volume was light and funds were net buyers
of around 1,000 contracts.  The wheat market was lower and that may have
actually helped the corn market as there was light corn/wheat spread trading
going on again yesterday.  Weather remains a factor in longer term corn
contracts as some forecasters want to talk about a greater possibility of
drought in the US corn belt in 2008, but that is a pretty long term
forecast.  Argentina weather is starting to get worse as the only rain they
are seeing is scattered, sporadic rain showers and they are experiencing net
drying at a time when they are already pretty dry.  In Brazil, the weather
remains pretty good, but they also look to dry out over the next week or so.

eCBOT market was lower overnight as we saw the crude oil over $1.50 lower at
one point and the bean market sell off.  Traders seemed to be waiting for
the release of the export sales numbers this morning and most traders are
going to be disappointed.  Expectations were 1.1 mil to 1.6 mil and actual
sales were 1.059, vs. 1.8 mil last week.  This number will be looked at as
bearish, especially with the huge weekly import inspections released on
Monday.  The bean, meal, and oil sales were pretty good, so we will see if
they can pull up higher than were the market closed overnight.  Outside
market should add weight to prices of the grain complex with a higher US$
and lower crude and metal prices.  Not a lot of news out this morning on
corn except for the export sales, so the corn market will look for direction
from other markets.  Beans are called to open lower because it looks like
China is done buying US beans, but it will be interesting to see if the
market finds buying on a lower opening.  Traders continuing to watch the So.
America as the weather forecast is dry and the chance of wide spread rain
showers does not look likely in the coming week or so.  This isn’t a huge
concern yet, but the world user is assuming Argentina will be able to have a
good year and help bring down prices.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCZ7                 391^2    -2^6                  393^4    391^0

ZCH8                408^4    -2^6                  410^6    408^0

ZCK8                419^0    -3^2                  421^0    419^0

ZCN8                427^0    -3^2                  429^4    427^0

Early Opening Calls: 2-3 lower

Top News

**USDA Corn 07/08 Export Sales Net: 1.059 mln mt; 08/09 Net: None mt;
expected 1.1-1.6 mln mt

**Stats Canada: 2007/08 Barley Production at 10.98 mln mt vs. 9.57 mln mt in
2006

**Stats Canada: 2007/08 Oats Production pegged at 4.696 mln mt

-- Informa sees Argentina Corn output at 24.3 mln mt vs. prior estimate of
23.9 mln mt

-- USDA attaché report estimates Turkey's 2007/08 Corn production at 2.9 mln
mt a reduction of 22% from the last report as severe drought cut into
output. Meanwhile corn imports were pegged at 800k mt, but industry import
estimates vary a lot at this point.  Imports of corn by-products, mostly
corn gluten feed as well as some DDGS from the United States and wheat bran
from Russia and Ukraine, have increased substantially, reducing the need for
corn.

-- Dalian May Corn futures fell 15 Yuan to settlement 1746 Yuan/mt, rest of
complex was lower also

-- eCBOT Corn Vol: 118,969; Pit Vol.: 38,444; Open Interest change: -1,093

-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Above
Precip. The Corn Belt will see periods of light precip today into Sunday.
Temps normal to below.

-- Outside markets. Energy -.75 at $86.70; Gold & Silver: -8.4 at $789 &
-.15 at $14; US $ up slightly vs. Yen and Euro

Cash Markets

-- CIF Corn steady . Dec. +30 to +31, LH Dec. +36 to +40,, Jan. +42 to +45,
Feb. +50 to +52, Mar. +50 to +52, A/M +40 to +42 J/J +41 to +44

TREND:

I do not want to under emphasis the change in the $US and the implications
to the grain markets. That said, here is how I feel about each of the grains

Corn has spent two days trading above the breakout into new highs. This is
supportive technically and will create upside opportunities. This is not to
say there will not be breaks---Dec is famous for unexpected corrections and
the $US could be a catalyst? Take on the 10 to 15 cent breaks when it or
they occur. Demand remains very strong and US corn remains relatively cheap
compared to other feed grains around the world.



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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