Linn Group Morning Corn Comment

CHICAGO - Jan 23/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Tuesday as we saw many of the markets lower
during the day after foreign markets were much lower on Monday while the US
markets were closed.  The grain markets were much lower on Monday night,
trading limit down at one point, but they recovered during the session so
corn almost traded higher on the day before selling off after 12:30.  The
March contract closed 9 ¼ lower and the December closed 11 lower.  Outside
markets are still the biggest influences on the corn market right now with
little new news out on corn.  Traders point to the funds as having the
biggest affect on the direction of corn as “money flows” seem to determine
direction and we saw fund liquidation yesterday trying to gain some
liquidity in these volatile markets.  The demand for corn remains strong as
we see new export sales almost everyday, but with all the money that has
come into the market over the last couple of weeks, there is bound to be
some liquidation with all the other markets selling off.  Volume was
moderate/heavy and funds sold around 8,000+ contracts by the end of the day.

The eCBOT market was lower again overnight after trading higher on the
opening, but the market found selling by 10pm CST.  The corn market was
really a two sided trade most of the night session before selling off late.
Both the March and the December contracts were down around 4-5 cents
overnight as traders pointed to overall market weakness and further fund
liquidation.  The demand for corn remains strong as So. Korea bot another
220,000 tones of US corn again overnight.  It seems like So. Korea is into
the US for corn almost everyday keeping the export demand very strong.
Weather remains a non-issue with Argentina still a little dry but the
forecast has a good chance for showers across most of the region in the
coming weeks and traders seem to be ok with that forecast.  Outside markets
are lower this morning with metals, energies, and stocks lower which should
weigh on the grains.  The FED had the surprise rate reduction yesterday with
another rate reduction anticipated next week after the FED meeting.  The
market should open lower this morning and will look for direction from
outside markets.  Weather is the only fundamental news that will make a
difference as we don’t have a USDA report until the end of March.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCH8                484^2    -4^6                  493^6    484^0

ZCK8                496^2    -5^0                  505^4    496^0

ZCN8                507^6    -2^2                  514^2    505^0

ZCU8                500^0    -4^6                  509^6    499^0

Early Opening Calls: 4-6 lower

Top News

-- Dalian Corn futures in overnight trade rose 7 Yuan basis the Sept
contract to 1,730 Yuan/mt. ($1=7.24 Yuan)

-- Globex Corn Vol: 211,105; Pit Vol.: 37,910; Open Interest change: +19,029

-- Weather: 6-10 Day Forecast: Normal Temps. Normal to Above Precip. The
Corn Belt will see some light snow and flurries today. Thursday and Friday
look dry. Saturday will see some scattered flurries. Temps normal to above.

-- Outside markets: Energy Complex -1.61 at $87.60; Gold & Silver: -12.0 at
$878.6 & -0.297 at $ $15.816; US $ is higher vs. Euro and lower vs. Yen

Cash Markets

-- CIF Corn up 1 to 4. Jan. +43 to +??, Feb. +46 to +48, Mar. +48 to +51,
Apr. +42 to +47, May +42 to +47, June +42 to +47, July +42 to +47,

TREND:

Volatility continues to be weighted the top side in options with calls
carrying 10 pct more vol than puts. If you need ownership ---This makes the
best trade buying futures and puts on this break rather than buying calls.
If you bot bean puts when we recommended the trade last week, liquidate when
you double your money. Count today as the first major long liquidation. Will
look at open interest in the AM to see just how much took place. Expect the
night session to be weaker again overnight in continuation of the
liquidation. Should be done by Thur or Friday leaving the market to back and
fill waiting for a weather reason to rally again?

What am I saying? This market will dip and weave---bend and not break.
Demand will resurface on the break in futures at the same time farmer
selling slows. For a minute thought it happened faster than expected when
the market rallied back today. Not so with the late sell off again.

Corn will be supported in CH at 4.60 to 4.40---CZ at 4.85 to 4.65.



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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