Linn Group Morning Corn Comment

CHICAGO - Jan 15/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market continued to move higher on Monday after the limit move
higher on Friday after the USDA report.  The overnight market was higher
Sunday night and early in the session, corn moved to limit up again and
stayed there most of the day before a sell off in the bean market pulled
corn off limit but it still closed 17-18 cents higher in most months.
Traders said they saw buying from everywhere including funds and spec
buying.  Corn saw some pressure as traders took profits on the second limit
up day in a row and the outside markets higher with crude up over $1 and
gold closing above $900.  The market also got more positive export sales
with the USDA announcing that So. Korea bot another 116,000 tones of US corn
overnight Sunday.  According to our figures, we had over 1 mil in export
sales last week in the announced sales alone.  Weather continues to be a
mixed bag in Argentina, the worlds #2 corn exporter.  Currently, Argentina
is experiencing very hot weather, but forecast call for rain later this week
with pretty good coverage.  With the USDA report behind them, traders will
turn their attention to So. America, especially with the USDA announcement
of the lower US corn stocks.  Corn in Argentina is in the beginning stages
of pollination.  Volume was moderate/heavy and funds bot 8,000+ contracts on
the day.

The eCBOT market was lower overnight as traders point to consolidation and
profit taking after corn has been up almost 40 cents in the last 2 days.  On
top of the surprise bullish grain report on Friday, we have seen fund buying
in the corn market, but many traders are saying that we are starting to see
the end of that buying over the next couple of days.  This could add some
additional pressure to the profit taking that may take place even if the
reasons for the latest rally haven't changed.  The speculative/fund money
will probably determine the direction for corn as there is little to no new
news out this morning.  On the bull side, different analysts want to talk
about higher corn prices this winter/spring with Informa talking about
$5.50-$6.00 corn.  The weather in Argentina seems to be drier than
originally forecasted, but the high pressure ridge that has been centered
there is expected to move our later in the week allowing thunderstorms to
develop, but coverage may be not that great.  This rain is very important
and if it doesn't happen, it could bring about another move higher in the
corn market as Argentina corn is starting to experience stress and needs
rain as it starts the pollination phase of crop development.  Corn should
open lower today as traders consolidate positions and take profit.
Investment fund money could be the highlight today and determine market
direction.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                509^4    -2^4                  510^6    505^0

ZCK8                522^2    -2^0                  522^4    517^0

ZCN8                533^0    -1^6                  534^0    528^0

ZCU8                529^2    -2^0                  530^2    525^6

Early CBOT Grain Complex:  Corn 2-3c Lower

Top News

-- USDA Ag Sec says his position on early withdrawal of CRP land still
hasn't changed since his announcement last autumn despite him acknowledging
that the upcoming crop year could be "extremely tight".  Of course he
created a little wiggle room by telling a Dow Jones interviewer that he
never said he would absolutely discount any early withdrawal.

-- Demand will pressure Dec Corn futures to trade in the range of
$5.50-$6.00/bu this spring, says official with Informa in an interview at an
industry summit sponsored by Reuters

-- France GMO research committee cites new evidence against Monsanto's GMO
corn variety Mon 810, this new data will allow France to invoke a
"safeguard" clause & extend its ban on growing this particular GMO seed
despite its EU approval.

-- Monday's USDA Weekly Corn Inspections: 50.511 mln bu; expected 37.0 mln
bu; prior 32.461 mln

-- Dalian Corn futures in overnight trade were 19 lower at 1,823 Yuan/mt
($1=7.24yuan)

-- eCBOT Corn Vol: 194,031; Pit Vol.: 50,761; Open Interest change: +15,569

-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip.
The Corn Belt looks dry today. Wednesday will see some showers and snow.
Thursday into Saturday looks dry. Temps below normal.

-- Outside markets: Energy Complex -.85 at $93.35; Gold & Silver: +4.8 at
$908 & +.038 at $16.412; US $ is down slightly vs. Euro and down sharply vs.
Yen

Cash Markets

-- CIF Corn steady up 2. Jan. +22 to +26, Feb. +27 to +30, Mar. +31 to +35,
Apr. +27 to +32, May +29 to +35, June +26 to +32, July +30 to +36,

TREND:

Typically the weaker basis and spread point to a market that is overdone to
the top side. This one has all the ear marks of a new crop leading telling
you that there is more to come. This can be the case if there is weather
that develops later. I think the moves are so dynamic that trying to put an
explanation to them will create even more confusion.

Feels as if the new money moving into the grain envelope should be about
done. The spread weakness is a result of the cash weakness in response to a
rally that has outrun the buyer's interest. I am told it is near impossible
to find any export interest for any commodity during the session today. As
hinted at earlier in the wire---this basis weakness is a great chance for
ownership. When the market is through chasing out the short hedger, those
purchases made this week will feel really cheap. The problem is that most of
the opportunities are in locations where not many can buy and hold. Farmer
take note. Those with old crop stocks might find it advantageous to hold on
again and find a way to market outside of selling cash.

Corn has walked right through the third counts in Mch at 4.61 and appears
ready to extend the gains to the next level near 5.83. The weekly chart
rolls up to a test of 5.50.  Counts in CZ were around 5.21. Traded over that
today. Fourth counts go to 7.83. It is not very smart to forecast fourth
counts. But take note that any weather market this spring or summer could
point to this type of rally



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.