Linn Group Morning Corn Comment

CHICAGO - Apr 10/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market jumped to new highs on Wednesday on the back of the USDA
releasing a lower stocks number, crude oil surged to new all-time highs, a
weaker US$, and a rally in the soy complex.  The May and July contracts
closed almost 14 cents higher, 10 cents off the highs, and the December
closed 16 ½ higher, almost 10 cents off the highs.  The USDA lowered the
ending stocks on Wednesday by 155 mil to 1.283 bil bu caused by a big
increase in residual feed usage and an increase in exports.  This data just
confirms traders feelings that corn stocks were lower.  Crude oil surged to
new highs trading over $112 at one point in the session before settling back
and closing just below $111.  Traders also pointed to the soy complex as
helping to carry the corn market as we had the soybeans trading limit up a
couple of times during the session and closing over 60 cents higher in the
May and July and 40 cents higher in the November.  Now that we got past the
export sales data, traders will focus their attention on the weather
forecasts and look for a window to start planting corn.  The current
forecast is still mixed with the government showing continued rain, but the
privates showing a clearing and better planting weather in the next 2 weeks
after we get through the huge spring storm covering almost all the Midwest
this weekend.

Overnight the corn market closed 6 higher for May, July, and December
rallying the last hour of the trading session after trading 2-4 higher most
of the night session.  The corn market has to gain acres after the USDA
report last week and the only way to do that is to increase the price.
Weekly export sales this morning were a little disappointing at 483,500 with
analysts estimating 800,000 to 1.0 mil.  The shipments were still strong,
but the weaker export sales will weigh on the market.  Traders will probably
forget the export sales after the first 5 minutes and look to the weather
forecasts for price direction.  The current weather forecast is positive for
corn getting planted as the forecast for next week and the 2nd week is
getting drier and the temps are supposed to be normal to above.  Remember,
it isn’t just the wet weather, but the cold that is stopping farmers from
planting corn right now.  Historically, corn prices decrease this time of
the year because planting is beginning and optimism is abundant, so some
traders are hesitant to sell the market.  But, the corn still has to get
planted, which it will, but as one veteran farmer told me yesterday, we need
to have 40% of the corn planted by May 1st, or there will be a reduction in
yield, which the corn market can’t take with the low current stocks and a
reduction in acres.  The corn market should open higher today off the night
session and a higher opening in the other grain markets, but it may be
difficult to hold gains today unless the weather forecast gets worse.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                611^2    6^2                   612^2    603^6

ZCN8                624^0    6^0                   625^0    617^0

ZCU8                629^2    6^0                   630^0    621^6

ZCZ8                 626^2    6^2                   628^0    618^4

ZCH9                634^0    7^2                   634^0    625^0

Early Opening Calls: 3-5 cents better

Top News

**USDA Corn 07/08 Export Sales Net: 473,900 mt; 08/09 Net: 9,600 mt;
expected 800k-1.0 mln mt

-- Head of grains for Cargill in Mexico says the division has forward
purchased 900,000 mt of this upcoming fall White Corn crop from farmers in
the Sinaloa state, while keeping purchases from farmers in Jalisco in a
range of 200-300,000 mt

-- CME Group announced it will offer electronically traded options on
futures contracts in Corn, Soybeans, Soymeal, Soyoil, Wheat, Oats, & Rough
Rice side by side during day-time open outcry trading hours beginning trade
date April 14, 2008.

-- Apr 15 is deadline to submit bids in a 100,000 mt Barley tender floated
by Jordan. Delivery for 50k mt is expected in FH May & the balance in LH May

-- Japan in for Wheat & feed Barley.  On April 16th they will tender for
55,000 mt of feed Wheat & up to 331,000 mt of feed Barley for July delivery.
For the 08/09 fiscal year they will import 200,000 mt of feed Wheat & 1.41
mln mt of feed barley

-- CFTC industry roundtable scheduled for Apr 22 to discuss recent events
concerning Agricultural markets.

-- Dalian Sept Corn futures rose 126 Yuan to 4,937 Yuan/mt

-- Globex Corn Vol: 321,028; Pit Vol.: 52,522; Open Interest change: +14,204

-- Weather: 6-10 Day Forecast: Above Temps West, Normal Below East. Normal
to Below Precip. The Corn Belt will see rain and thunderstorms with good
coverage today and Friday. Saturday will see some scattered rains north.
Sunday into Tuesday looks dry. Temps below normal.

-- Outside markets: Energy Complex -0.47 at $110.40; Gold & Silver: -0.1 at
$934.3 & -0.110 at $18.105; US $ is down vs. Yen & is slightly down vs. Euro

Cash Markets

-- CIF Corn off 1 to 4. Apr. +33 to +36, May +36 to +40, June +?? to +36,
July +?? to +39, Oct. +40 to +45, Nov. +41 to +45, Dec. +43 to +48

TREND:

Like the corn spreads but have to question why the Z/N9 has not already
tightened with the threats of reduced acres and the potential of drawing
inventories down to less than is tolerable. Look to buy Dec in this spread
looking for this spread to move potentially to inverses. The risk is that
the corn market rallies past the ability for cash hedgers to maintain short
hedges---this would result in very weak basis formations that could push
this spread wider than it should

Still see the wheat corn spread as the major driving force here. Wheat has
to be fed to extend corn supplies. This means the price structure has to
come together---either with a rally in corn or a break in wheat or a
combination of both.



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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