Linn Group Morning Corn Comment

CHICAGO - Dec 19/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Tuesday on the back of profit taking and the
lack of fresh news out on the corn market.  The corn market has closed
higher over the last week or so and corn was almost 40 cents higher since
the end of November and was due a pull back.  The corn market made 11 year
highs on Monday.  The March contract closed 6 ¾ lower and the profit taking
started early in the session.  Even with the sell off, the market gave back
little of what it had gained over the last 30 days.  Technicians said that
March closed above its moving averages even though it was weaker.  Remember,
this is the last full week of the year and many traders and funds are
squaring positions before the start of the holiday markets.  Volume was
moderate, but light compared to recent sessions and funds sold close to
5,000 contracts on the day.  The weather in So. America seems to be a
non-issue as the rains last week eased talk of dryness as the crop is just
getting started.  Traders also pointed to a stronger US$ which hit a 2 month
high against the major currencies.

eCBOT market was higher overnight with the March contract closing 2 ¾ higher
after yesterday’s sell off.  Overnight, China announced that they would be
selling another 500,000 tones of corn from their reserves.  This is the 3rd
announced sale from their reserves over the last 3 weeks and points to a
tighter world corn market.  Taiwanese feed markers were seeking up to
370,000 tones of Chinese corn and now due to tight domestic supplies, it
doesn’t look like it is going to happen.  This is just another sign that
China will not be exporting corn this year.  President Bush is expected to
sign the Energy Bill this morning which includes the mandate for the use of
ethanol.  The rains in Argentina last week were deemed very helpful, but
some of the rains forecast for this week and weekend are being reduced by
some forecasters which will help support the corn market.  Look for corn to
open higher this morning and then look for direction from outside markets.
Wheat will be stronger this morning giving support to the corn market and
crud oil is higher.  It should be difficult for corn to find buyers on a
higher market, unless the funds get involved.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCK8                444^4    1^6                   445^2    441^2

ZCH8                434^6    2^6                   435^0    430^2

ZCN8                453^0    2^6                   453^0    449^0

ZCU8                450^4    2^0                   450^4    447^0

Early Opening Calls: 2-3c better

Top News

-- 500,000 mt Corn sales tender announced by Chinese gov't from its grain
reserves set for December 25th. This would the 3rd announced sale from
reserves during December following ones on Dec 11 & Dec 18.

-- To encourage more hog production Chinese officials are looking at
subsidies to farmers.  Proposals include money earmarked to help farmers
improve hog farm structures, money for vaccinations against various diseases
& subsidies to encourage keeping sows in breeding stocks.

-- Dalian Corn futures fell 6 in overnight trade to 17,25 Yuan/mt while most
other contract months in the complex were lower also

-- eCBOT Corn Vol: 107,067; Pit Vol.: 29,611; Open Interest change: +4,137

-- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to Above Precip.
The Corn Belt will be dry today into Friday. Saturday will see some showers
and snow. Sunday looks dry. Temps normal to above.

-- Outside markets: Energy complex +.27 at $90.35; Gold & Silver -2.0 at
$801 & steady at $14; US $ down slightly vs. Yen and up slightly vs. Euro

Cash Markets

-- CIF Corn steady up 2. Dec. +24 to +27, LH Dec. +28 to +31, Jan. +33 to
+36, Feb. +43 to +45, Mar. +45 to +46, A/M +38 to +40 J/J +38 to +40

TREND:

My point in the charts in the start of the wire is to show that the rally in
this market may not be done. I remain bearish for the short run but the long
term outlook is really still up in the air. Take note

Seasonal outlook is for a break into the holiday. Could get more dynamic
than I think but the potential of the market is so big that I have to come
away from shorts on the break that comes over the coming week and not stay
into the New Year



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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