Linn Group Morning Corn Comment

CHICAGO - Feb 7/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

Wow, what can we say about the violent trade yesterday in the corn market.
After flirting with limit up in almost all months, corn sold off in the
middle of the day to close at least 7 lower in most months.  The corn market
followed the wheat and bean markets higher, buoyed by speculative buying as
many months made new contract highs early in the day.  After the buying
stopped, the market quickly retreated as some of the back months in wheat
came off limit and the soybean market started to sell off.  Traders also
pointed to technical selling after reaching contract highs early in the
session with some technicians wanting to talk about a blow-off top
happening.  Volume was huge at over 300,000+ contracts and funds were net
buyers on the day of 2,000 contracts after being buyers of 12,000+ earlier
in the session.  Traders also talked about rumors that the energy secretary
yesterday was talking in a congressional hearing about rolling back the
ethanol rebates.  This news came out later in the session and probably is
part of the reason the market was spooked and sold off.  Some analysts and
firms put out statements that they didn’t believe the rumors, but the market
reacted negatively

The corn market overnight sold off early in the night session, carry through
on the sell off late in the session yesterday, but it recovered by the close
this morning with the March closing ¾ higher and the December ½ lower.
Weekly export sales today were within the estimates but not the much bigger
number that traders have come to expect from corn.  Traders still want to
talk about the roll back in the ethanol mandates this morning, but others
keep saying that it isn’t going to happen, so we will see.  The US energy
secretary is speaking in front of Congress about bio-fuels today, so we will
see if there is any mention of the possible roll back.  Corn did come back
last night and we will see if it is going to hold or if we are going to see
further selling if we open unchanged, slightly higher.  These are huge
markets and we are going to see these wild swings and that is what we saw
yesterday.  There is very little new news out in the grain markets this time
of the year, so watch out and protect your profits if you can.  The corn
market is called to open unchanged maybe higher and it will look to other
markets and rumors for direction.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCH8                502^2    0^6                   502^6    495^6

ZCK8                514^6    0^4                   515^0    508^2

ZCN8                525^4    -0^2                  525^6    519^0

ZCU8                524^4    0^0                   524^4    519^2

ZCZ8                 525^2    -0^4                  525^4    519^2

Early Opening Calls: Steady to 1 cent better

Top News

**USDA Corn 07/08 Export Sales Net: 1.029 mln mt; 08/09 Net: 75,000 mt;
expected 1.0-1.4 mln mt

-- USDA monthly crop report is released Friday morning at 7:30 AM. US ending
Corn stocks average estimates are 1.411 bln bu. below the 1.438 bln in
January's report.  Wheat ending stocks at 274 mln, below January's 292 mln
bu. Soybean carryout is estimated by analysts at 167 mln bu down from
January's 175 mln bu.

-- Dept of Justice, as reported by WSJ, has proposed to end futures
exchanges from having ownership or controlling stake in futures clearing
business.

-- Baltic Exchange Dry Freight Index fell 30 pts, -0.5%, to 6,002 pts
Wednesday

-- GM Exec tells audience at Chicago auto show the company expects half of
its models to run on ethanol by 2012

-- Dalian Corn futures exchange closed for trading due to New Year holiday,
trading resumes Feb 13

-- Globex Corn Vol: 322,783; Pit Vol.: 45,648; Open Interest change: +16,248

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt will be mostly dry today. Some light snow flurries
Friday and Saturday, Sunday and Monday. Temps normal to below.

-- Outside markets: Energy Complex -0.36 at $86.78; Gold & Silver: +1.5 at
$902.0 & +0.102 at $16.651; US $ is higher vs. Euro and is down slightly vs.
Yen

Cash Markets

-- CIF Corn steady off 2. Feb. +32 to +37, Mar. +32 to +42, Apr. +35 to +39,
May +39 to +42, June +?? to +40, July +39 to +43, Oct. +40 to +46, Nov. +40
to +48.

TREND:

The night session will be under pressure as trade takes the reversals in
corn and beans to heart. Not sure it is that easy. The highs today will be
very important. Be careful pressing and if this market starts lower and
reverses up, could be a big deal again.

Cash continues to support the Mch contracts in both KC and Mpls. Chi is a
toss up. Back into bear spreads in Chi Z/N at 16 over the last two days. K/N
in Chi got to well over $1.00 today which was my target on the correction.
Time to be short it again but it is still loaded with risk.

Mpls doubled margins finally. There were 15 thou open interest in Mch to
start today. That is just not coming down very fast?

Goldman roll starts tomorrow. If short Mch contracts time to be out of them
over the next few days. I suggest going to the May in corn and beans.



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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