Linn Group Morning Corn Comment

CHICAGO - Jan 17/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Wednesday, but off the lows made early in
the session.  Traders pointed to the possibility for a world wide recession
as having a negative impact on the US grain markets and traders taking
profits after the recent run higher.  Outside market were a lot lower as
well helping to push the grain markets lower as we saw gold and crude oil
down significantly.  China also talking about trying to curb the runaway
inflation and some traders looked upon this as a negative for the grains.
Traders are looking for a possible consolidation in the corn markets after
the recent highs.  The weather in So. America remains a mixed bag as Brazil
is doing pretty good, but Argentina is dry and some of the crops are
starting to become stressed and need rain.  Argentina is currently forecast
to receive rains today and tomorrow and then dry out till the middle of next
week.  The rains forecast for the next two days needs to happen as traders
have heard about this forecast for the last week.  Volume was very heavy and
funds were big sellers, app. 10,000+ contracts by the end of the day.

The eCBOT market was higher overnight as we saw buying come back in the
market after the sell off yesterday. The outside markets were higher
overnight helping the grain markets and some traders looked at yesterdays
break as a buying opportunity.  Weekly export sales were huge.  Analysts
estimates were 1.6 mil to 2.1 mil and actual sales were 2.38 mil, the
biggest weekly export sales of the year and 2 ½ times the 4 week average.
Traders were expecting a big number as we already had 1.4 mil in announced
sales, but the actual number was still very impressive.  On top of the
weekly export sales, the USDA announced overnight sales of 179,000 tones of
US corn to Taiwan.  Demand has been the driver of the corn market, not
weather, not supply constraints, but demand and export sales seem to confirm
this every week.  The weather in Argentina remains a concern as the current
forecast for today and tomorrow has reduced the opportunity for rains and
the rains over the next 2 weeks will be a hit or miss, but the temperatures
should be moderate, not really hot.  The corn market should open higher
in-line with the overnight trade but it may find strength off the export
sales, but it seems lately, weekly export sales have been overlooked by the
market.  Keep one eye on the weather in So. America because the market isn’t
really factoring in a weather market yet.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                507^6    5^2                   508^0    502^2

ZCK8                519^6    5^0                   520^0    514^0

ZCN8                530^2    5^0                   530^2    522^6

ZCU8                527^0    5^0                   527^0    520^2

Early Opening Calls: 3-5 cents better

Top News

**USDA Corn 07/08 Export Sales Net: 2.369 mln mt; 08/09 Net: 120,000 mt;
expected 1.6-2.0 mln mt

-- EU total grains crop forecast at 292 mln mt for 2008, up slightly from
291 mln mt forecast in December by Strategie Grains.

-- EU Corn crop production forecast at 59.7 mln mt, up from the 59.2 mln mt
December estimate & 12 mln mt higher than 2007's crop, acc. to Strategie
Grains

-- Argentina Ag Sec left its corn area planted unchanged at 4.0 mln ha from
the prior month's forecast, but still ahead of last year's 3.58 mln ha

-- Dalian Sept Corn futures on the Dalian Exchange fell 3 to 1,794 Yuan/mt
on volume of 298k contracts

-- eCBOT Corn Vol: 219,983; Pit Vol.: 39,535; Open Interest change: +4,633

-- Weather: 6-10 Day Forecast: Below Normal Temps. Below Normal Precip. The
Corn Belt will see snow and snow showers today into this evening. Other than
a few flurries it will be dry Friday into Monday. Temps below to much below
normal.

-- Outside markets: Energy Complex +.80 at $91.64; Gold & Silver: +4.8 at
$886.8 & +0.157 at $16.065; US $ is slightly lower vs. Euro and lower vs.
Yen

Cash Markets

-- CIF Corn up 1 to 5. Jan. +36 to +39, Feb. +37 to +40, Mar. +38 to +42,
Apr. +32 to +37, May +34 to +39, June +31 to +37, July +34 to +40,

TREND:

There is a move under foot at the CBOT to expand daily trading limits. Still
in the talking stage but the move is toward 35 cents for corn, 70 cents for
wheat and 85 cents for beans. The move is gaining some momentum but is a
long way from being law

This chart is Mch Corn. The island formation after such a sharp run up is
bothersome but has to wait to see if it is confirmed tomorrow. It could see
a normal break of 20 to 25 cents as normal. Closing the gap left by the crop
report would be bothersome. Fund length is still very heavy and could lead
to more liquidation than normal.

The weekly corn chart is equally bothersome with equal legs in and out of
the congestion zone shown for the first half of last year implying the
target of 5.25---fairly well made.



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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