Linn Group Morning Corn Comment

CHICAGO - Jan 2/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Monday on light trading from speculators and
light fund buying.  The grain markets traded an abbreviated session on
Monday because of the New Years holiday and many traders had taken the day
off.  The March contract closed slightly higher, up 3 ½, after early
weakness on spillover pressure from the soybean market.  Volume was light
and funds bot app. 3,000 contracts on the day.  Traders said they saw
renewed corn/soybean spreading to bring prices back in line after the recent
run up in prices in soybeans.  Traders also said they saw some outright fund
buying in the corn market as there continues to be talk of new investment
fund money coming into the grains and rebalancing of money coming out of
soybeans, wheat and crude and into corn, KC wheat, and sugar.  The USDA
released weekly export inspections which was below estimates, but largely
ignored by the market.  Weekly export sales will be delayed until Friday
morning because of the holiday on Tuesday.

eCBOT was much stronger overnight as China announced new export quotas on
top of the previously announced export tariff’s as they continue to try and
curb exports to keep prices at home under control.  Some flour mills in
China have said they will have to break current contracts or they will be
exporting flour at a loss.  These new export quotas and tariff’s come on the
back of the tariff’s announced last week and surprised most exporters.  This
announcement shows just how worried Chinese officials are about food-flation
at home and how they are going to protect their own needs before exporting
grain. There will be no grace period and these quotas take effect
immediately.  So. American weather remains a very important ingredient in
the overall grain picture as Argentina rains are still not enough to stop
overall net drying, but Brazil is getting very beneficial rains.  Crops are
far from being in trouble in So. America, but the world is dependent on a
good crop from them to help already depleted world stocks and in helping US
farmers make decisions on what to plant this spring.  Volumes were big last
night and some talk this morning about new investment fund money coming into
commodities as we see gold and crude oil up strong this morning.  The corn
market should open in line with last nights close, but be careful if the
funds are involved because we can see big swings.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                461^4    6^0                   462^0    456^0

ZCK8                471^6    5^0                   472^6    466^6

ZCN8                481^0    4^4                   482^4    476^4

ZCU8                478^4    4^2                   479^2    474^0

Early Opening Calls: 4-6 higher

Top News

-- Buenos Aires Grain Exchange estimates 90% of the Corn is planted noting
some delays due to dry weather.

-- Weekly Thursday USDA Export Sales will be released on Friday, Jan. 4th,
2008 due to New Year's Holiday.

-- Monday's USDA Weekly Corn Inspections: 38.742 mln bu; expected 43.0 mln
bu; prior 48.89 mln

-- EIA Weekly Wednesday Petroleum Stocks report will be released a day late
on Thursday, January 3rd due to New Year's Holiday.

-- EIA Weekly Thursday Natural Gas Storage report will be released a day
late on Friday, January 4th due to New Year's Holiday.

-- Dalian Corn futures contracts fell in overnight trade.  Volume leader May
was off -13 and settled at 1,682 Yuan/mt; Sept futures fell -9 to 1,803
Yuan/mt

-- eCBOT Corn Vol: 62,794; Pit Vol.: 17,584; Open Interest change: +9,146

-- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to Above Precip.
Other than a few light snow flurries the Corn Belt looks dry today into
Friday. Saturday and Sunday could see some light showers. Temps above
normal.

-- Outside markets: Energy Complex +1.77 at $97.77; Gold & Silver: +10.8 at
$849.4 & +.159 at $15.08; US $ is down slightly vs. Yen and down sharply vs.
Euro

Cash Markets

-- CIF Corn steady off 2. Dec. +31 to +34, Jan. +33 to +37, Feb. +42 to +44,
Mar. +45 to +48, Apr. +39 to +42 May +40 to +45 June +39 to +42

TREND:

The corn market continues to walk away from pricing orders. Export trade
remains excellent and domestic use is getting a boost from improved ethanol
margins. The chart at the right outlines the corn outlook. The move into new
highs on the weekly chart came on the Dec expiration into carries to the Mch
but we have confirmed this trade over the last three weeks. The gap left
will be support on any break. Part of rally can also be garnered from lack
of selling going into the Jan crop report with talk of a reduction in the
crop forthcoming---in yields in not in a cut in acres?



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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