Linn Group Morning Corn Comment

CHICAGO - Jan 3/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Wednesday on the back of fund buying with the
front making new contract highs and trading as levels we haven’t seen in
over 10 years.  The March contract closed 7 cents higher, but 7 cents off
the highs.  The corn market was supported by the rally in the soybean market
and a general rally in the overall commodity markets.  The March soybeans
were up over 34 cents on the close, gold was up over $20 and crude oil was
up over $3.00.  This pointed to general buying by investment funds as new
money came into the markets.  Volume was heavy with the funds buying almost
10,000 contracts yesterday by the end of the day in the corn market.  As one
trader said, the word in 2008 so far is commodities and even though the
ending stocks in corn are twice what it was a year ago, the money is flowing
into the grains.  Traders also pointed to Argentina for support as it starts
its key pollination/reproductive stage and they are experiencing less that
ideal weather.  Argentina is receiving some rains, but it is not wide
coverage and most area’s are experiencing net drying.  Also, China’s
decision to tax 2008 corn exports is positive for the corn market.

The eCBOT market continued to move higher with the March contract closing up
another 4 ½ cents overnight.  No new news out overnight with weekly export
sales delayed until tomorrow because of the New Year’s holiday.  Grain
markets were all higher overnight as the markets found renewed buying
interest and the outside markets all made new highs overnight.  The gold and
crude were all higher overnight before setting back early this morning,
possibly forcing the grain markets to open a little lower than expected.
Demand for corn remains excellent on every front (feed, ethanol, exports)
and there seems to be no end in sight.  After talking to traders, it seems
to be hard to find somebody that wants to sell the corn market.  Traders
also speculating on the release of the final 2007 crop report next week as
rumors are the US corn total production number will be lower than expected,
thus positive for the corn market.

Calls: 3-5 higher

Agriculture News

-- Weekly export sales will be released Friday morning.

-- USDA’s chief economist Keith Collins and American Farm Bureau economist
released a report estimating 2008 plantings.

There projections are Corn 88.0 mil. acres vs. 93.6 mil. last year, Soybeans
69.5 mil. acres vs. 63.7 mil. last year,

Wheat 64.5 mil. acres vs. 60.4 mil. last year.

-- Some talk in the trade that the index Funds have some $38 to $40 bil. to
put into the markets in the first quarter of

 2008.

-- The NYMEX exchange confirmed one contract of Crude Oil traded at $100.00
in the pit Wednesday.

-- Deliveries: Soybeans 449 no stopper Oil 4,569 no stopper Meal 1,347 Bunge
stopped 3

-- Funds started the new year with a bang buying 10,000 Corn, 6,000
Soybeans, 4,000 Wheat, 4,000 Meal, 4,000 Oil.

Transportation News

-- Barge freight steady : STL 260 – 275 IL. River 350 – 365 Ohio 325 - 335

-- BN rail freight steady: Jan. -100 Feb. -150 Mar. -200

Weather

6-10 Day Forecast: Above Normal Temps. Above Normal Precip. The Corn Belt
looks dry today and Friday. Saturday into

Monday will see some scattered showers. Temps above normal.

TREND:

These markets continue to ride the investment rainbow without an end in
sight. The extreme volatility shown over the holidays continues but today
the trade was very one sided with only the buy side in use---not hardly with
anyone dealing with country elevators continuing to hedge up farmer selling
daily! That is what makes the rally today so impressive. One customer looked
at country elevator short hedge positions and estimated the bean short was
at least 1.75 under current levels, corn near 70 cents below the closes
today while wheat shorts out 1.60. This continues to put stress on hedge
funds and the fact that some of these shorts are on new crop grain for 2009
means the hedges will be on for a while.

Corn has also made counts at 4.61 in CH. Let someone else be long for now
but the support levels continue to follow the trade higher. Users are being
stretched with ownership down to days and weeks instead of months. We have
stressed the need to maintain 90 days but not many have been able to pull
the trigger and maintain those levels with the CH up over 60 cents in the
month of Dec---only 20 trading days. Take note that ethanol margins is up
again today to 20 cents, highest levels we have been since summer.

Look for this market to try to be stronger again tomorrow but fail at higher
levels. Stay tuned---and welcome back if you have been gone over the
holidays.



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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