Linn Group Morning Corn Comment

CHICAGO - Feb 8/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on the day, but well off the lows established
earlier in the day as the soy complex, led by meal had a late day rally that
dragged the corn market higher.  The March contract closed 2 cents lower and
the December contract closed 3 ¼ lower at the end of the day after both were
down over 10-12 cents earlier in the trading session.  Traders said the corn
market saw profit taking after the recent run up and with no new news, the
corn market is trading anything and everything and not necessarily the
fundamentals.  Traders also pointed to the release of the supply demand
report this morning as a reason for the late day rally as traders wanted to
square positions in anticipation of a lower stock number from the January
report.  Volume was huge at over 300,000 for the second day in a row and
funds sold an estimated 4,000+ contracts by the end of the trading session.
Export sales were strong again this week and even though sales were within
the estimates, sales are up 33% from last year.  The weather in Argentina
remains on the back burner as the country continues to see rains across most
areas, but some forecasters are speculating that these rains will be too
little to ease any drying conditions and we will continue to see net drying
conditions.  Yesterday, the Bush administration said they would go ahead
with the 2008 ethanol rebates and that nothing had changed.  It had been
rumored on Wednesday that they were considering getting rid of the ethanol
rebates.

The corn market rebounded overnight from the lower move yesterday as the
market anticipated the release of the USDA report this morning.  The report
this morning showed carry out/ending stocks unchanged from the January
report and was a little bit of a surprise as traders expected a lower stocks
number this morning.  As one trader said, it isn’t as if this is a bearish
report, but most were expecting a bullish report.  The soybean and wheat
stocks reports were bullish, so those markets are expected to open very
strong which will help support the corn market.  The USDA estimated
Argentine production at 21.5 mil vs. Jan estimate of 22.5 mil.  This change
has been talked about for the last week or two, so it shouldn’t be a big
surprise.  The world ending stocks were pushed a little higher for corn.
The corn market is still a follower and even though the report was neutral,
it is still expected to open higher today as the bean and wheat markets
should be a lot stronger.  Many traders don’t put much emphasis on this
report, but with no new news, traders are looking for any information.  The
corn market should open higher overnight, but look for wheat and beans to
lead the grain complex higher.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCH8                506^4    7^0                   515^4    501^4

ZCK8                517^6    5^4                   527^0    513^4

ZCN8                528^4    5^2                   538^0    524^0

ZCU8                527^2    5^6                   535^4    521^4

ZCZ8                 527^4    5^0                   536^2    522^6

Early CBOT Grain Complex, Post-Report:  Corn 7-10c Higher

Top News

**US Feb Corn 07/08 Crop Prod: 13.074 bln bu.; Jan 13.074 bln bu.

**US Feb Corn 07/08 Carryout:  1.438 bln bu.; est. 1.40; Jan Rpt 1.438

**World 07/08 Corn Carryout: 101.9 mmt; Jan Rpt 101.33

**Feb China 07/08 Corn Output: 145 mmt; Jan Rpt 145.0

**Feb S Africa 07/08 Corn Output: 11.0 mmt; Jan Rpt 10.0

**Feb Argentina 07/08 Corn Output:  21.5 mmt; Jan Rpt 22.5

-- Draft export grain quota has been halted by Ukraine gov't, acc. to local
press reports, but no information for the halt was given.

-- CBOT & KCBT announced plans to increase Wheat daily trading limit to 40c
beginning Feb 12, pending approval from the CFTC

-- MGE petitioned the CFTC to remove daily price limits for its HRS Wheat
futures contract.  If approved Feb 25th would be first day to trade w/o
limits

-- Baltic Exchange Dry Freight Index rose 133 pts, or about 2.1%, to 6,135
pts Thursday

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

-- Globex Corn Vol: 278,413; Pit Vol.: 53,264; Open Interest change: +1,920

-- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Above
Precip. The Corn Belt will see mostly dry conditions today. Saturday and
Sunday will see some flurries. Monday and Tuesday light snow and rains.
Temps below normal.

-- Outside markets: Energy Complex +0.86 at $88.97; Gold & Silver: +6.8 at
$913.2 & +0.242 at $17.018; US $ is slightly lower vs. Yen and lower vs.
Euro

Cash Markets

CIF Corn steady up 2. Feb. +32 to +40, Mar. +39 to +43, Apr. +38 to +40, May
+38 to +40, June +39 to +43, July +42 to +45, Oct. +42 to +45, Nov. +40 to
+48.

TREND:

Crop report in the AM. Do not look for much in the way of major changes. The
outlook forum is later this month and may be a better platform for taking
any sharp new measures. Expect a larger corn export number to show a smaller
corn carry out.

Goldman roll did not take place today in wheat due to limit moves---oops.

If corn and beans spend another day firming, the reversals will eventually
come out. There will be some that want to sell the market into the spike
day’s trade. That means CH will have problems at 5.05 to 5.10. SH will have
similar problems at 13.45 to 13.50. Meal came back strong today on the big
meal sales and this tugged the meal spreads up one more time. Suspect these
gains in the spreads are not sustainable.



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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