Linn Group Morning Corn Comment

CHICAGO - Jan 7/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on Friday after recovering almost 8
cents off the lows earlier in the session on limited trade.  The March
contract closed ¾ higher.  There was weakness across all the markets as we
saw a sell off in wheat, beans, and crude oil.  Traders also pointed to poor
economic data released by the government as helping push grain prices lower
because a possible recession would decrease the demand for commodities.
Traders are also still looking for commodity funds to rebalance this week
and that rebalancing is supposed to include buying corn.  Weekly export
sales below expectations helped push corn lower from the beginning of the
trading session, but corn was able to rebound, especially as beans and wheat
came back late in the session.  Volume was light/moderate and funds were
estimated to have bot 3,000+ contracts on the day.  Weather in So. America
also remains a factor as Argentina continues to receive rains, but not the
coverage that they need to relieve dryness across some of the important
growing areas.

The eCBOT market was down slightly overnight in a tight trading range.  The
corn market was lower early in the session and recovered later in the
session.  Trader sentiment this morning seems to be that the market isn’t
seeing any aggressive selling as everybody is talking about fund rebalancing
will help the corn market.  It seems suspect that these funds are announcing
when and how they are going to rebalance.  Traders are also weary of the
USDA report that will be released on Friday as many are estimating we will
see a decrease in ending stocks and possibly a lower production number.  If
either or both of these things happen, that will be supportive of corn.
Talking to different traders this morning, they feel the corn market is due
a correction, but nobody is willing to step out and sell the market.
Weather in Argentina remains a mixed bag as the rain has ended for 3-5 days,
but temps have moderated but there will still be net drying.  The corn
market should open unchanged today and then look for direction.  The outside
markets are lower with crude down over $1.00 and the metals are lower.  Fund
rebalancing is expected this week and if it doesn’t happen, you could find
some sellers, but probably until the release of the USDA report on Friday,
corn will be well supported on lower markets, but it will be tough to find
buyers on stronger markets.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                466^0    -0^6                  467^2    463^0

ZCK8                478^2    0^2                   478^4    474^4

ZCN8                488^0    0^2                   488^0    484^4

ZCU8                487^0    0^6                   487^0    483^0

Early Opening Calls: steady

Top News

-- Total of 385,000 mt of Corn bought by S Korea feed mill group for
delivery between April and June.  Traders noted the purchase was divided
into 7 tranches of 55,000 mt each.

-- Dalian May Corn futures rose 1 Yuan to settle at 1,694 Yuan/mt, while
Sept futures rose 9 to 1,829 Yuan/mt in overnight trade

-- eCBOT Corn Vol: 120,656; Pit Vol.: 26,588; Open Interest change: +2,273

-- Outside markets: Energy Complex +.25 at $98.17; Gold & Silver: slightly
better at $866 & -.020 at $15.44; US $ is up slightly vs. Yen and Euro

Cash Markets

            Bean Barge       Corn Barge        SRW Barge       HRW Track
Ill Riv Frt

Jan       +8/12 H             +32/34 H              +0/20 H          +65/70
H           370

Feb       +20/24 H           +40/43 H              +10/30 H        +70/75 H
375

March   +27/32H                        +44/47 H              +15/30 H
+75/85 H           365

Jun/Jly  +39/41 N           -50/45 N
360

Truck                Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago                       -30 F     -7 H     -40 H

Toledo              -55 H    -13 H   -17 H

Dec ILL            -40 H    -9 H                  -8 H                -250 H

TREND:

Corn is on a mission to get to 5.00. Not sure how much of a break we get in
front of the crop report next week and would use small breaks as a buying
opportunity for those that need pricing. Certainly get enough of those
calls. Appears that many have run through earlier ownership and it has been
very difficult to maintain ownership. The improved margins on ethanol has my
S&D in a state of flux---Took use down hard in early Dec and will now have
to ratchet it back up. This has a multiplying affect because the improved
margins will also bring the construction schedule back into play. The
margins took a bit of a hit on Fri with a sharp drop in ethanol prices while
corn was strong but the trend has firmed enough to have an affect. Ethanol
used a record 205 mil bu of corn in Oct. That total should grow to around
315 mil bu by Jly and be close to 350 mil bu a month by year end. The
margins took a bit of a hit on Fri with a sharp drop in ethanol prices while
corn was strong but the trend has firmed enough to have an affect.



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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