Linn Group Morning Corn Comment

CHICAGO - Apr 16/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market continued higher on Tuesday as planting delays and outside
market remain very bullish.  The continued cool weather and rains across the
main growing portion of the corn belt are keeping corn prices higher and
bring speculative money back into the grain markets.  The main discussion
with corn traders is the continued rains across the Midwest when most areas
are supposed to be planting corn by now.  The USDA planting progress
released on Monday afternoon just reinforced this feeling and current
forecast doesn't show much corn being planted the next week to 10 days.
Traders continue to worry about corn getting planted late, thus preventing
trend line yields or above which could be very bad because of the lower
ending stocks.  Today's genetics will help push traditional dates back some,
but you   Traders also pointed to the crude oil market making new all-time
highs as being supportive to the corn market.  Because of ethanol, corn is
still highly tied to the crude oil and energy markets and grain traders will
keep a careful eye on those markets.  Volume was still big with most of it
coming from active spreading from May to July and December and funds were
buyers of 5,000+ contracts by the end of the day.

Overnight, the corn market was stronger once again as the weather forecast
remains the same, delaying planting, and the crude oil market made new highs
again.  The weather forecast remains the focus of attention for most traders
because of the current delays and the need to meet at least trend-line
yields or better.  The lower stocks and lower planting expectation numbers
released last month have put farmers and the world on notice that the US
needs to plant as much as corn as possible so there isn't a huge shortage.
The demand for US corn doesn't seem to be going anywhere and if China
becomes an importer of corn next year, the demand gets just that much
bigger.  Traders are also pointing to a weaker US$ as helping corn exports.
The bottom line is the forecast for rain over the next 10 days should
further delay plantings and make everybody very nervous.  I don't think
anybody thinks that the corn won't get planted, it is just that in the past,
late planted corn has some yield reduction.  Late planted corn pushes back
pollination into the heat of the summer making the crop more vulnerable to
problems.  The corn market should open a couple higher, but it will struggle
to rally and we could see a pull back today after the last 2 days, but any
pull back should be well supported.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                608^2    2^2                   608^4    602^0

ZCN8                621^6    2^2                   622^0    615^4

ZCU8                628^4    2^0                   628^4    623^4

ZCZ8                 627^6    2^4                   628^0    621^2

ZCH9                636^4    2^4                   636^4    632^6

Early Opening Calls: 2-3 cents better

Top News

-- USDA Ag Sec said a shift in gov't food aid policy is needed as global
food prices soar.  He described current policy as reactionary, but says
future policy should be based on facts.  He noted the White House has
proposed providing assistance to buy local crops grown in areas experiencing
need, instead of buying US food commodities & shipping to the needed
destination.  He also suggested if transport infrastructure is lacking, aid
should be offered to alleviate those situations or break down import tariffs
if they're are stifling the flow of food.

-- Philippines ag ministry plans to temporarily halt permits to allow
transformation of ag land into property for real estate development while
the gov't studies the effects further.

-- Japanese corn processor, Nihon Shokuhin, plans to import up to 150,000 mt
of GMO Corn for non-food & food use during 2008.

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

-- Dalian Corn futures complex was overall slightly lower in overnight
trade, active Jan contract was 1 Yuan higher at 1,940 Yuan/mt

-- Globex Corn Vol: 250,769; Pit Vol.: 22,234; Open Interest change: -
11,668

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Above Normal Precip.
The Corn Belt looks dry today and most of Thursday. Friday and Saturday will
see scattered showers move west to east. Sunday and Monday look dry. Temps
normal to above.

-- Outside markets: Energy Complex -0.17 at $113.62; Gold & Silver: +16.8 at
$948.3 & +0.571 at $18.427; US $ is slightly down vs. Yen & is down vs. Euro

Cash Markets

-- CIF Corn steady off 1. Apr. +35 to +36, May +39 to +41, June +34 to +37,
July +38 to +42, Oct. +40 to +45, Nov. +41 to +45, Dec. +43 to +48

TREND:

The weather inspired round of buying today was not limited to corn alone.
Both rice and corn into new all time contract highs.

Corn is certainly interesting---trading within the range of trade last
week---getting used to the $6 price tag. There are certainly plenty of
fundamental reasons for the gains. Planting delays and the potential of
reduced yields on corn planted late and forced to pollinate during the heat
of the summer. We need every bushel and every acre just to balance out the
production with demand in the coming year. As pointed out earlier in this
wire---there will be some corn planted next week but the clock is ticking
and the forecast is not good---will not be enough corn planted by next
Monday to make the trade comfortable.

I have been pounding on the fact that wheat feeding has to take place to
stretch corn supplies in the US and around the world in the coming year.
With the initial strength in wheat today thought this was starting to mean
the corn rally just had to be much bigger. The technical targets for corn at
6.20 to 6.30 may have given too many the feeling that was enough? Not sure
there is any "enough" until we see a rationing affect or make wheat closer
to corn value in the cash?

 As shown in the chart at the right the Jly contracts have a ways to go. May
see it stumble about 50 cents lower. Cash may be a larger part of the trade.
However, soft red wheat cash has firmed again over the last week on news of
additional new wheat business and the Black Sea suppliers withdrawing of
wheat export offers?

May also have to see the corn values gain further against beans just to keep
the corn planter on longer after the delays start to suggest lower corn
yields?



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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