Linn Group Morning Corn Comment

CHICAGO - Jan 9/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market surged higher on Tuesday on fund buying and active import
interest.  Yesterday was the day that everybody was talking about fund
rebalancing and the buying of corn and we saw just that with moderate/heavy
volume and funds were estimated to have bot 15,000 contracts and open
interest was up over 20,000 contracts.  The fund buying started early in the
session but traders said you really could see the index funding come on
strong late in the session.  The March contract was up over 12 cents and
made fresh 11 year highs but still below the all time high of $5.54.  There
was a lot of export news yesterday supporting the demand side of the corn
market and So. Korea announcing a tender for GMO corn for food use which is
a first and possibly important as it may open other markets to GMO corn,
i.e. Europe.  Traders also keeping an eye on the weather in So. America and
Argentina dries out over the next 5 days which will lend the support to the
corn market.  Argentina is the #2 exporter of corn and the world is
dependent on them having a good crop.

The eCBOT market was higher overnight as the outside markets were strong and
traders expect the funds back in buying corn today just like we saw
yesterday.  Export activity remains very strong as we saw corn sales to So.
Korea and Egypt overnight.  We continue to see the world come to the US for
corn and there is no reason to think this won’t continue.  Argentina weather
remains a key to price movement, especially after all this fund re-balancing
is done.  Argentina received some rains and the weather is cooler, but most
of the growing areas still need more rains for crop development and some
analysts want to start talking about reducing production, but the crop still
has a long way to go.  Fund rebalancing will be the talk of the markets
today, but we will also see traders starting to even their positions in
front of the release of the USDA report on Friday morning before the
opening.  Corn has made a very impressive run lately so there might be some
profit taking.  Traders said even if there is selling in the corn market, it
should find support from exports and funds as many traders are expecting a
lower stocks number.  Corn should open higher today and then look for
direction.  Take note that the outside markets which were much higher when
the grains closed are now off the highs and gold and crude are actually
lower on the day now.  This could affect the grain prices.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                481^4    2^6                   482^0    476^6

ZCK8                493^0    3^0                   493^2    488^2

ZCN8                502^2    2^6                   503^0    497^6

ZCU8                500^0    3^2                   500^0    495^4

Early Opening Calls: 2-3c better

Top News

*USDA reported private sale of 110,000 tons of US Corn sold to S Korea for
delivery during 2007/08

*USDA reported private sale of 120,000 tons of US Corn sold to Egypt for
delivery during 2007/08

-- Thursday Corn & Soybean tender set by Taiwan's Sugar Corp.  The group is
seeking 12,000 mt of US Soybeans & 30,000 tons of US Corn for Feb delivery,
acc. to traders

-- Official from Ukraine agriculture federation suggested that the country
could export an additional 3.8 mln mt of grain in 2nd half of 2008 season,
despite the gov't in October imposing 1.2 mln mt export quota starting Jan
1, 2008.  Acc. to the official that would bring the total to 5.0 mln mt of
exportable grains.

-- Analysts following the Argentina Corn harvest say despite increased
acreage this season, lack of moisture would impact yields across the country
& suggested that total production would be less than anticipated.

-- Corn grower group in Indonesia say they expect production this year to
reach 14.2 mln mt, up 1 mln from the prior season & the head of the group
says increased production would likely lower imports to around 1.0 mln mt, a
drop of 50% from this year

-- Dalian Corn futures settled slightly lower, Sept off 1 Yuan to 1,836
Yuan/mt ($252.60/mt)

-- eCBOT Corn Vol: 144,454; Pit Vol.: 33,017; Open Interest change: +20,190

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Below Normal Precip.
Showers will end in the far eastern Corn Belt today. Thursday into Sunday
mostly dry with a few snow flurries favoring the north. Temps normal to
above.

-- Outside markets: Energy Complex -.20 at $96.13; Gold & Silver: -3.0 at
$877 & -.079 at $15.74; US $ is higher vs. Euro, lower vs. Yen

Cash Markets

-- CIF Corn steady off 2. Jan. +29 to +33, Feb. +36 to +40, Mar. +40 to +44,
Apr. +33 to +37, May +36 to +39, June +34 to +37, July +38 to +40,

TREND:

Strong trade for March corn, settling up 12 ½ cents at 4.78 ¾.  Daily chart
count for CH at 4.90 is becoming a reality as we near this objective in the
first full week of trading in 2008. It appears after today’s action that
corn is entering an acceleration phase and it is possible with the right
circumstances that the long term weekly objective at 5.28 could be achieved
in the first quarter of 2008. Support for March corn is the 4.70 – 4.68
level and has the potential to become a base for CH. WH/CH has confirmed a
double top and should test the November low at +3.73.  The chart pattern
indicates this spread can get to 3.25 WH over CH. Today’ settle was + 4.28 ¾
WH.  A settle over 4.61 negates all downside targets.



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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