Linn Group Morning Corn Comment

CHICAGO - Feb 11/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Friday, but well off the highs as the
market found late selling pressure on profit taking and the bean market
selling off its highs late in the session.  The wheat market is the leader
of the grain complex and will continue to go limit up in MN and KC until the
shorts can get out.  The wheat market is not just being driven by
fundamental factors but also by shorts that are caught and can't get out of
the market.  The crop report was decidedly neutral for the corn market but
it was bullish for beans and wheat.  Traders had expected a bigger export
number, thus reducing stocks, but the market didn't get it.  A leading
analysts said he expects the gov't to wait for further data before making
any changes and we could see those changes in the March 12 report of wait
until the blockbuster report on March 31st.  Volume was huge at over 400,000
contracts and funds bot 5,000 contracts at the end of the session.

The overnight markets were lower on Sunday night with follow through selling
from late in the session on Friday.  Wheat is the leader of the grain
complex and even with expanded limits overnight, it was up 60 cents in the
nearby months.  After lasts weeks price action, traders seemed to think corn
could be making a top, but with these volatile markets, it is anybody's
guess.  Traders said that some large speculators could be locking in profits
because of the expanded limits in the wheat market may point to a top in the
wheat market.  After the wheat market has allowed all the shorts out of the
market, we could see big selling in the whole wheat complex and that will
weigh on all the grains.  The fundamentals remain positive for the corn
market, but with little to no new news, it will trade outside forces and it
will be volatile.  The corn market should open lower this morning and then
look for direction.  Argentina received some good rains over the weekend but
it probably helps beans more than corn.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCH8                499^6    -8^2                  512^6    495^0

ZCK8                511^4    -9^4                  524^4    506^6

ZCN8                522^4    -9^0                  534^4    516^4

ZCU8                521^6    -8^2                  532^6    518^4

ZCZ8                 522^2    -7^6                  532^6    516^0

Early Opening Calls: 7-9 cents down

Top News

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

-- Globex Corn Vol: 356,637; Pit Vol.: 55,852; Open Interest change: -25,148

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt will see snow and snow showers today and Tuesday. Dry
Wednesday. More chances of snow Thursday. Dry Friday. Temps near to below
normal.

-- Outside markets: Energy Complex +0.58 at $92.34; Gold & Silver: +6.4 at
$924.5 & +0.203 at $17.321; US $ is down slightly vs. Euro and Yen

Cash Markets

-- CIF Corn steady up 2. Feb. +37 to +39, Mar. +41 to +44, Apr. +36 to +43,
May +40 to +45, June +38 to +43, July +41 to +45, Oct. +40 to +44, Nov. +41
to +45.

TREND:

There was no mistaking the pain in the wheat market this week as the
"hidden" increases in flat price with limit bid movements each day. Both
cash traders with short hedges and specs with unwise shorts in Mpls tried to
cover shorts. At the end of the week with flat price at $21 a bushel the
bids and offers were $1.00 apart. The cash value of high protein spring
wheat has now joined the durum at $24 to $25 a bushel. One has to question
if the hard wheat market is headed in the same direction. The design of the
KC delivery market makes it much harder to squeeze as no one really wants
the 10 pct protein in that system. However, there is no doubt in my mind
that there will be an attempt to use some of the stocks in the cash market
in coming weeks.

This applies to the inter-market spreads as well. Is very difficult to
maintain a wheat value at $7 over corn. Either wheat is too high or corn is
too cheap. Ethanol plant liquidation held down corn today but the rally in
the energy market could resurrect margins quickly.

I have been amazed at the lack of concern about the winter storm in China.
One customer today enlikened it to the Hurricane two years ago in NOLA.
Devastation is much more wide spread and the Gov there will be proactive to
get supplies to needy populations. Freezing domestic prices has forced the
lack of stocks to the forefront. Inability to buy higher priced world goods
has just made the supplies tighter. The only way now will be a Gov sponsored
import of the higher priced goods to be discounted back into the domestic
market. Soybean oil the next Mpls wheat? How about rapeseed? World supplies
are tightening.



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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