Linn Group Morning Corn Comment

CHICAGO - Jan 18/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly lower on Thursday after being up early in
the session on huge export sales and new sales to Taiwan announced overnight
Wednesday.  Weekly export sales were bigger than expected and the biggest
weekly sales in over 12 years.  On top of the weekly sales, Taiwan bot
another 180,000 tones of US corn Wednesday night.  Traders pointed to
continued big export sales as further confirmation that the price of corn is
not a deterrent to the world in purchasing corn needs.  The market reacted
much stronger before finding selling pressure later in the day on continued
talked on a global recession that will hurt commodity prices.  Many of the
outside market sold off yesterday and that helped push the grains lower.
Volume was moderate/heavy and funds were about even on the day after the
late sell off.  Weather in So. America remains a non-issue as Argentina
continues to be dry but is receiving some rains that is helping keep it
going, especially during the key pollination phase of growth.  Some traders
want to talk about possible fund liquidation as money managers may look at
the grains as maybe having another move higher, but not the 40-50% moves we
have seen the last year or so.

The eCBOT market was lower overnight following the soybean markets and
should open lower this morning.  You continue to hear talk on CNBC and from
traders about a global recession as we have seen the stock market have the
biggest 3 day drop since early 2002.  More export sales announced this
morning with Japan buying 101,000 tones overnight.  Traders will tell you it
is an important day technically for the grains today with the break
yesterday off of the highs and the continued sell off last night.  Some talk
about possible fund liquidation, but we haven't seen any activity in the
markets yet.  Weather remains the same in Argentina with light rains, but
the area is still dry.  Margins were also raised in corn starting with last
nights trade, so that could help pressure futures, but it wasn't a huge
increase.  Look for corn to open lower and then look for direction from the
other markets.  Informa releases their latest acreage estimate and if they
make a big move, like moving 4-5 mil acres out of corn and into beans, watch
out.  That information is supposed to be released today at 10:30 am.  With
no really new news, we are having a fight between speculation and demand vs.
possible global recession and economic slowdown.  Baltic freight weight
which is a key indicator in world economic activity was down again yesterday
which tells us less goods are being shipped.  Market should open lower,
possible two sided trade today.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCH8                497^0    -5^0                  501^6    496^2

ZCK8                510^0    -4^6                  514^0    508^4

ZCN8                520^2    -5^0                  524^0    519^0

ZCU8                518^0    -3^2                  520^0    518^0

Early Opening Calls: 3-5 cents down

Top News

-- Grain traders in the Pacific Northwest say continued strong export demand
for US white wheat helped push cash prices of the commodity to $15/bu in
yesterday's trade

-- Commodity shipping index sets another single day record drop on London's
Baltic Dry Freight Index.  Index stands at 6,472 down 443 pts Thursday from
Wednesday's 6,915.  Head of the exchange yesterday held back from saying
global recessionary forces are driving the index lower, noting its still
high by historical standards, but other analysts aren't as quick to dismiss
& they note dramatic fluctuations typically do not occur at this time of
year for the index.

-- EU weekly grain import licenses totaled 950,000 mt; For the recent crop
year cumulative import licenses total 17.3 mln mt vs. the 7.9 mln mt in the
same period a year earlier.

-- Biofuel Energy announced that start-up of its first two ethanol plants
had been delayed by roughly 90 days. Commercial production at the plants is
now expected before the end of Q2. Despite the delay, the company does not
anticipate any material change in its previously estimated total plant
construction costs of $1.35-$1.40 per gallon

-- Dalian Corn futures 16 lower in overnight trading settled at 1,778
Yuan/mt ($1=7.25 Yuan/mt)

-- Globex Corn Vol: 149,612; Pit Vol.: 25,500; Open Interest change: +6,189

-- Outside markets: Energy Complex +0.62 at $90.69; Gold & Silver: +3.3 at
$884.3 & +0.201 at $16.203; US $ is even vs. Euro and slightly better vs.
Yen

Cash Markets

                        Bean Barge       Corn Barge        SRW Barge
HRW Track       Ill Riv Frt

Jan                   +11/16 H           +40/ H              +0/   H
+60/68 H           320

Feb                   +15/20 H           +40/ H              +15/ H
+60/70 H           350

March               +18/22 H           +42/44 H           +25/30 H
+65/75 H           360

Jun/Jly              +36/38 N                                   -50/  N
+65/  N             360

Truck                Beans   Corn     Wheat   Meal Hi-pro        Oil

Chicago                       -65 H    -5 H     -70 H

Toledo              -63 H    -18 H   -17 H

Dec ILL            -55 H    -12 H                -18 H              -300 H

TREND:

The corn market is also stalling after our test of the highs over $5.10.
Still not a bear signal just yet but obviously $5.00 corn is creating some
volatility. A close below the $4.95 gap would suggest a near term, so we
have a fairly clear spot for risk on longs. Until then, still expect buying
here with potential for new highs. A close over $5.12 would confirm another
bull swing and run for the $5.50 to $5.60 targets. Friday should be a
pivotal trade for this corn move. Similar mixed trade on December could
force a break to $5.10.



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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