Linn Group Morning Corn Comment

CHICAGO - Feb 12/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Monday as we finally saw the wheat market
breakdown from its recent limit up run as increased margins in other grain
markets are forcing some liquidation and we are continuing to see some
profit taking with no new bullish news.  The MN, KC, and Chicago exchanges
all increased limits for wheat and increased margins a minimum of 100% and
that helped put a stop to the record climbs in wheat and weighed on the
other grain markets.  July and March closed 4 cents lower and December
almost 5 cents lower.  The corn market was much lower early in the session
with some months trading 15 cents lower, but the market came back on
commercial buying and late short covering.  Spreading also helped the corn
market as we saw traders liquidate their long wheat/short corn spreads as
the wheat market moved lower.  Volume was very heavy again at over 300,000+
contracts and funds were net sellers of 7,000+ contracts at the end of the
day.  Technically, the corn markets closed above both their 10 and 20 day
moving averages.  Export inspections were strong after the close, but below
the estimates.  The weather in Argentina was a non-factor as some areas
received rains, but the corn crop is already passed the stage where rain can
really help the crop.

Overnight, corn was slightly lower on light trading as the wheat market
continues to dominate the grain markets and the other markets will take
their cues off the wheat markets.  Traders also want to talk about
continuation of the profit taking and technical selling we saw last week.
Israel was into the US for 55,000 tones of corn which shows that US corn
exports are still competitive.  The weather in So. America remains conducive
to good crop development, but some of these late rains won't help make up
for the lack of rain early in the season.  There is very little new news out
on the corn market so it will look for the other markets for direction.  If
we continue to see liquidation in the wheat markets, corn will feel some
pressure, but as we saw yesterday, corn should be supported on an extended
sell off as end users need to buy corn.  We will start to hear traders talk
about planted acres over the coming weeks and that will dominate the trade.
The USDA will announce planted acres intentions at the end of March.  The
corn market should open a couple lower and then look to the wheat market.  A
much lower wheat market will weigh on the corn, but it may be a short term
correction.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCH8                501^4    -2^0                  506^4    500^0

ZCK8                514^0    -2^6                  518^6    512^4

ZCN8                525^0    -2^4                  529^6    523^4

ZCU8                524^4    -1^4                  527^4    524^4

ZCZ8                 524^0    -1^2                  527^4    522^4

Early Opening Calls: 1-2 cents lower

Top News

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

-- Globex Corn Vol: 218,923; Pit Vol.: 56,353; Open Interest change: +3,818

-- Weather: 6-10 Day Forecast: Below Temps East, Above West. Below Normal
Precip. The Corn Belt will see light snow and flurries today. Wednesday and
Thursday mostly dry. Dry Friday and Saturday. Temps normal to below.

-- Outside markets: Energy Complex -1.16 at $92.43; Gold & Silver: -8.3 at
$914.8 & -0.056 at $17.418; US $ is slightly lower vs. Euro and is better
vs. Yen

Cash Markets

-- CIF Corn steady up 2. Feb. +39 to +41, Mar. +42 to +45, Apr. +37 to +42,
May +40 to +45, June +39 to +44, July +40 to +44, Oct. +40 to +44, Nov. +41
to +45.

TREND:

The break in Chi and KC wheat is big enough and came off new contract highs
again so that this has a better chance of putting in a high than the
reversals of last week. This has been the market leader so on the surface
could be negative for all. However, the rally back in corn and beans late
today could have been due to spreading long corn and beans against wheat
again. This is probably a lot safer today than it was last week.

We ran into commercial type buying on the lows today in the corn market.
Look for today's lows to hold up. Beans are still laboring with the Lunar
New Year and lack of Asian trade. Today's lows are also important to beans.
Would not be surprised if they come out, but don't look for any extension to
the down side.

Both and corn and beans have tended to market time in a rather broad trading
range, while wheat has gone bananas to the top side. The surprise can very
well be that beans and corn could hold up better as wheat sells off. This
does not mean that the wheat story is done, we still have a long time to get
to new crop. There will be selling now on rallies in wheat, and corn and
beans will be faced with buying on weakness.



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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