Linn Group Morning Corn Comment

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

The corn market settled higher on Tuesday on the back of the rally in the
bean market and generally bullish news on the USDA stocks report released
before the opening.  The March contract closed 6 ¼ higher up toward the high
of the day and almost 10 cents off the lows.  The March contract traded to
new highs that we haven’t seen since the middle of June.  Traders pointed to
the continued price battle with soybeans for acres and technical buying
after the market traded lower early in the session.  With the soybean rally,
corn prices need to keep up so they don’t lose acres.  The decline in ending
stocks by the USDA was not a surprise, but it still provided bullish news
for the corn market.  As we mentioned yesterday, the corn market sold off on
the bullish news after it was official, but it quickly founding buying after
selling off.  Corn traders also pointed to higher crude oil prices as
helping to support the corn market as crude was up over $2 yesterday.
Traders will now look toward the export sales tomorrow morning and see if
the import inspections are a leading indicator for the weekly sales.

eCBOT market was lower overnight following the bean market.  The March
contract closed 3 lower as traders seemed to look at the outside markets for
direction.  The corn market is not really looking at the very little
fundamental data available and following other markets as traders keep an
eye on the crop situation in So. America.  Weather down in So. America will
become more and more important as traders start to decide exactly how many
acres they are going to plant this spring and prices will be the biggest
determinant.  The outside markets were lower overnight when the grains
closed but those markets have turned around with the crude oil up over $1.50
and the metals are higher on the day.  Export sales also had Japan buying
113,000 tones of US corn overnight.  Technicians point to the corn market
breaking out of its trading range and developing good technical support and
that should help support the corn market and maybe help the market push
higher.  Talking to traders this morning, they feel the corn market should
open lower, find buying and move higher.  The opening calls for a lower
market might be muted because of the rally in the outside markets since
grains closed.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                421^0    -3^0                  422^4    419^4

ZCZ7                 403^0    -3^4                  405^0    402^0

ZCK8                432^6    -1^6                  433^0    430^0

ZCN8                439^0    -2^0                  440^0    437^0

Opening Calls: 1-2 lower

Top News

-- EU 2007/08 Corn production pegged at 48.98 mln mt down from 2006/07
production of 56.71 mln mt, acc. to EU's COPA-Cogeca

-- Avian flu worries in China holding down demand for Corn in state reserve
auction, despite the low demand at this week's auction Chinese officials
still plan a Dec 18th sale of 500k mt of Corn from reserves again.

-- Chinese press cites deputy ag official offering pessimistic outlook of
avian flu outbreaks this winter & upcoming spring. The official said radical
change is needed to throughout the entire poultry supply chain in prevention
& containment.

-- A 36 Bln gallon renewable fuels standards amendment offered by New
Mexico's Senator Domenici could be added in with other amendments as part of
US farm legislation, acc. to head member of the Senate Ag cmte Harkin.
Previously Senator Harkin didn't think the amendment would be allowed
because it wasn't a relevant add on to the legislation.

-- UNICA of Brazil estimates that country's production of cane based ethanol
at 19.7 Bln L (5.2 bln gal) in 2007/08 vs. the 18.8 Bln L (4.99 bln gal)
seen in 2006/07

-- S Africa grain stats office reports net White Corn exports were 8,288 mt
in week ending Dec 7.  9,204 mt were exported while 916 mt were imported
during this time period.

-- S Africa grain stats office reports Yellow Corn exports were 1,300 mt in
week ending Dec 7.

-- Dalian May corn futures were 14 lower to 1735 Yuan/mt in overnight trade

-- eCBOT Corn Vol: 207,402; Pit Vol.: 43,205; Open Interest change: +17,290

-- Weather:6-10 Day Forecast: Above Normal Temps. Above Normal Precip. The
Corn Belt will be mostly dry today and Thursday. Friday and Saturday may see
some rain and snow favoring southern areas. Temps normal to below.

-- Outside markets. Energy +.68 at $90.70; Gold & Silver: -2.70 at $811.60 &
-.145 at $14.55 ; US $ lower vs. the Euro, higher vs. the Yen

Cash Markets

-- CIF Corn steady up 1. Dec. +31 to +34, LH Dec. +36 to +39,, Jan. +44 to
+47, Feb. +51 to +54, Mar. +51 to +54, A/M +41 to +43 J/J +41 to +43

TREND:

Corn is trying very hard to hold onto the recent gains. Much of the gain
today came on spread trade. The cut in ending stocks also led to bull
spreading that added to the gains in front months. The H/Z spread shown
below is an indication that the gains might continue---one comment heard
today, “farmer has more money than normal now---buying his corn in Dec-Jan
may be more difficult than normal?”



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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