Linn Group Morning Corn Comment

CHICAGO - Dec 14/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Thursday after opening lower and making new
highs around 12 noon before settling back.  The March contract closed 1 ¾
higher and the December contract closed 2 higher.  Traders pointed to
continued good export sales and the expected passage of the energy bill
which would mandate ethanol usage.  The new energy bill provides for strong
incentives for the use of “green” fuels which should help corn prices.  The
weekly export sales weren’t crazy big, but solid and pointed to continued
demand by the world for US corn as ending stocks dwindle.  The corn market
opened lower, which was unexpected, but most of the early sell off was on
profit taking and outside market influence.  Volume was moderate/heavy and
funds were buyers of 9,000+ contracts on the day.  Talk of China doing away
with export subsidies also supported corn because if this happens, this will
virtually take China out of the corn export business.  So. American weather
remains a mixed bag with the weather and soil conditions in Brazil are
positive, but the weather forecast and soil conditions in Argentina are not
great and no rain is forecast.

eCBOT market was higher overnight as the US Senate passed the Energy Bill
giving a boost to the use of ethanol and other “green” fuels for the future.
While it is a boost to corn because of ethanol, most of the subsidies will
be paid for ethanol produced by non-corn products, such as switch grass and
corn stalks.  The outside markets are mixed with the metals markets lower,
and crude higher.  Traders point to continued good export sales and the
energy bill as the reason for the positive outlook this morning for corn
prices.  Japan purchased 158,000 tones of US corn overnight for delivery in
2007/08.  Argentina’s crop region received some better shower coverage than
originally forecast, but temps are also expected to heat up over the next
week or so.  The So. American crops this year are more important than ever
and you continue to hear traders talk about how we need good to above
average yields to just keep up with demand and with out these big yields,
prices could really take off.  Corn should open higher today in line with
the close overnight, but we would look for possible profit taking on over
bought conditions and a higher US$ this morning.  Corn is a follower and
needs momentum to continue its move higher.  Investment funds are the wild
card as they have been active this week and what would happen if they
weren’t buying the grain markets.  There is still a lot of talk of funds
rolling out of wheat and into corn and beans and this is helping to support
corn prices or at least discourage active spec selling.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                437^2    2^2                   439^0    433^4

ZCZ7                 421^0    2^2                   421^0    417^0

ZCK8                448^0    2^0                   449^6    444^6

ZCN8                455^2    2^2                   456^6    451^4

Early Opening Calls: 1-2 better

Top News

**158,496 tons of US corn privately sold to Japan, acc. to USDA

-- US farm industry survey shows 2008 Corn plantings are expected to fall
-6.0% in 2008 to 88 mln acres down from 2007's 93.6 mln acres, but
December's survey is above 85.0 mln acres estimated back in August

-- US congressional members of both houses extend 2002 farm legislation
until March 2008 in an effort to ensure no gap in funding as the current
legislation lingers in committee

-- The InterContinental Exchange - US board of directors approves March 2008
as transition date for its futures contracts to fully electronic trading,
acc. to press release issued by the exchange.  This will mean futures will
be exclusively available on the electronic platform starting March 2, 2008 &
trading in the pit will cease in February. Options on futures will still be
pit traded.  The ICE-US trades various physical commodities such as FCOJ,
cotton, sugar, coffee, cocoa, index & currency futures.

-- Dalian corn futures were mostly lower in overnight trade, active May off
-9 to 1736 Yuan/mt

-- eCBOT Corn Vol: 199,314; Pit Vol.: 36,783; Open Interest change: +14,711

-- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to Above Precip.
The Corn Belt looks mostly dry today. Saturday will see snow with the
heaviest amounts favoring central and southern areas. Sunday into Tuesday
dry. Temps normal to below.

-- Outside markets. Energy steady at $92.25; Gold & Silver: -5.5 at $793.5 &
-.102 at $13.95; US $ is slightly up vs. Yen and up vs. Euro

Cash Markets

-- CIF Corn steady off 2. LH Dec. +28 to +32, Jan. +?? to +41, Feb. +46 to
+48, Mar. +46 to +48, A/M +38 to +42 J/J +40 to +42



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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