Linn Group Morning Corn Comment

CHICAGO - Jan 10/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was slightly lower on Wednesday as traders seemed to be
taking profits in front of the USDA crop report on Friday and other markets
selling off later in the day.  Traders pointed out that there was some weak
longs in the corn market as it made new highs the last couple of days and
those traders are going to be out of the market before the crop report on
Friday unless new news pushes corn higher.  Traders also said that the
inability for crude and precious metals to hold their early gains kept
buyers on the sidelines and probably brought out some sellers.  Exports were
strong again as we had So. Korea and Taiwan into the US for corn Tuesday
night.  Volume was light/moderate and fund activity was actually on the sell
side for 3,000+ contracts.  There has been a lot of talk of fund
re-balancing and that included buying corn, but the markets didn't see that
activity yesterday.  Weather in So. America remains a mixed bag as Brazil
seems to be in pretty good shape, but Argentina is still dry and rain
forecasts have been spotty.  Corn is entering its key pollination phase in
Argentina, so any rain at this time is considered very timely and will help
with yields.

The eCBOT market was fractionally lower overnight on light volume as traders
look to outside markets and the approaching USDA report tomorrow morning.
Traders point to the corn market as being oversold especially in front the
USDA report.  Most analysts are looking for a decrease in yield and ending
stocks.  These lower estimates are one of the reasons we have seen corn
rally the last week or so to new 11 year highs.  Also, we have seen fund
re-balancing help corn as funds have bot corn and sold the beans and wheat
markets.  Weekly export sales released this morning were weaker than
expected for the second week in a row.  Analysts were expecting 500,000 to
1.0 mil and actual sales were 670,000.  While this is in the middle of the
expected range, traders are used to big corn export sales.  This could be
further evidence that prices may have gotten high enough to curb sales, but
then this week, we have seen pretty good export sales.  The outside markets
are lower this morning and we seem to keep hearing negative news out of the
media on the economy, both domestically and internationally.  Corn should
open a little lower and then look for direction from funds or possible
profit taking.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                476^4    -0^6                  477^4    475^4

ZCK8                488^0    -1^0                  489^2    487^2

ZCN8                498^0    -0^6                  499^0    497^0

ZCU8                496^0    0^0                   496^0    495^0

Early Opening Calls: 1-2c down

Top News

**USDA Corn 07/08 Export Sales Net: 670,100 mln mt; 08/09 Net: 50,000 mt;
expected 700k-1.0 mln mt

-- On Wednesday Taiwan's Sugar Corp. announced a Corn & Soybean tender.
However, the group did not make any purchases Thursday. They had been
seeking 12,000 mt of US Soybeans & 30,000 tons of US Corn for Feb delivery,
acc. to traders.

-- Group of private buyers in Israel on Thursday bought 45,000 mt of US Corn
for April delivery, acc. to cash traders.

-- Core inflation during 2007 rose to 4.0% in Mexico, while overall consumer
prices were up 3.76% during 2007. Tortilla prices rose 5% in the latest
monthly data.

-- China's pork prices during December rose 6.4% from the prior month, acc.
to the governments development & reform committee.  They also noted a jump
in vegoil prices, rapeseed oil rose 6.7% on the month, while soyoil prices
rose 7% from Nov to Dec.

-- Dalian corn futures volume leader Sep contract was up 1 Yuan to settle at
1,837 Yuan per m/t

-- eCBOT Corn Vol: 130,950; Pit Vol.: 32,998; Open Interest change: +9,682

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. The Corn Belt will see light showers and snow today and Friday.
Saturday into Monday looks dry. Temps near normal.

-- Outside markets: Energy Complex -1.40 at $94.25; Gold & Silver: -9.2 at
$872.6 & -.287 at $15.55; US $ is slightly higher vs. Yen and is slightly
lower vs. Euro

Cash Markets

-- CIF Corn steady off 2. Jan. +27 to +33, Feb. +34 to +40, Mar. +?? to +37,
Apr. +30 to +33, May +32 to +35, June +30 to +33, July +34 to +36,

TREND:

Today we recommended buying corn vs. selling wheat. This trade is based on
the weakness currently shown in all the spreads and technical studies. The
fact that the long term relationships between corn and wheat have been
stretched to unheard of levels to guarantee an major increase in acreage
around the world. It has worked and now the higher prices have done a better
job of rationing demand than expected. The long term chart is shown below.
We chose to do the trade in the May contracts. Little more time to work and
we already have it on in the Jly.

I am concerned that if the wheat market is going to break apart, it could
have some long reaching affects on corn and beans. Wheat has been the
bullish leader and losing that leadership could allow the market more of
sinking feeling? Fund buying supporting prices now but there is not a lot of
support



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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