Linn Group Morning Corn Comment

CHICAGO - May 6/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed very weak on Monday as the market sold off late in
the day with traders concerned about better crop plantings and the negative
media attention that ethanol is receiving.  July closed 19 ½ lower, 9 cents
off the lows and December closed 16 ½ lower, almost 8 cents off the lows.
The corn market really traded in a tight range most of the day but the last
35-45 min, the market broke down.  A lot of traders wanted to talk about the
market getting spooked about better crop planting number released by the
USDA after the close and farmers telling their brokers that they are
planting corn.  I know I talked to different farmers from around the Midwest
and most had planted or were planting corn, but most said it was on ground
that was marginal, not the best for planting.  With the lack of news, corn
just can’t seem to hold any gains and this time of the year is a really
tough time to rally the grain markets.  Traders also pointed to technical
weakness and the corn price being over priced when compared to wheat.
Volume was moderate/heavy, almost 300,000 contracts, and funds were net
sellers of 6,000 contracts.

Overnight, the corn market rallied a little after the release of the USDA
plant progress numbers after the close.  The USDA estimated 27% of the corn
planted vs. 45% last year and 59% 5yr average.  This number was looked at a
little bullish because after the drop on Monday, many traders I talked to
said they were now expecting a much bigger number.  The concerning part of
the numbers were the lack of progress in Illinois, Iowa, and Missouri, some
of the biggest corn growing states.  After looking at the Illinois number,
some traders thought it was too small and not accurately estimating number
of acres planted, there is actually more corn acres planted.  The corn
market recovered a little overnight, but probably not as much as some
expected after the big sell off yesterday at the end of the day.  The corn
market should open a little higher today but after not being able to rally
last night, I would expect the market to have trouble today.  The weather
remains wet/cool, just like it was forecasted last week which should put a
stop to many planters, but the market just seems to shake off this news.  As
one veteran traders said yesterday, it is hard to impossible to kill the
corn crop this time of the year, so nobody is willing to step out and buy
corn with both hands.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                584^6    2^6                   588^4    584^0

ZCN8                597^0    3^0                   601^0    595^0

ZCU8                607^0    2^4                   610^6    606^0

ZCZ8                 615^4    2^6                   619^4    614^0

ZCH9                624^6    1^0                   630^0    624^6

Early Opening Calls: 2-3 cents better

Top News

-- USDA's Corn weekly planting estimate was pegged at 27% complete, well
behind last year's pace of 45% complete & the 5 yr avg pace of 59% complete.
Corn emerged was 4% vs. 12% last year & the long term average of 17%.

-- Monday's USDA Weekly Corn Inspections: 30.727 mln bu; expected 37.5 mln
bu

-- Australian Crop forecasters group pegged the upcoming Canola crop at 1.55
mln mt a rise of 43% from last year's drought hit crop.  They also raised
its 08/09 Barley crop estimate to 9.54 mln mt, that's 57% above last year's
output

-- EIA reported daily ethanol production in February reached an all time
high of 518,000 bpd.  Feb.’s figure was 8,000 bpd higher than Jan.
February's total ethanol production was 15.03 mln bbls, up 39% from the year
ago Feb.

-- Wednesday May 7th Stats Canada will release its March 31st grain stocks.
Collectively, traders peg stocks of Wheat at 10.8 mln mt as of Mar 31 vs.
year ago stocks of 15.977 mln mt. Durum Wheat stocks are expected at 2.0 mln
mt down from the 3.18 mln mt same quarter year ago.  Canola stocks are
forecast at 20% lower at 3.8 mln mt, down from 1Q 2007 stocks of 4.755 mln
mt.

-- 16,000 mt European Feed Barley tender issued by Israeli group, with bid
deadline set for May 6th

-- 100,000 mt of barley tender was issued by Jordan's state grain buying arm
on Monday, the bid deadline is May 20th.  50,000 mt are expected for LH June
& the other 50k mt are expected in FH July

-- CBOT May Corn Delivery: 279

-- Active January Corn futures on Dalian Exchange settled at 1,986 Yuan/mt a
drop of 8 from the prior day

-- Globex Corn Vol: 255,434; Pit Vol.: 34,677; Open Interest change: + 3,050

-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip.
Today will be mostly dry for the Corn Belt. Tonight showers and
thunderstorms will move west to east into Friday. Saturday looks dry. Temps
normal to below.

-- Outside markets: Energy Complex -0.35 at $119.62; Gold & Silver: +0.6 at
$874.6 & -0.003 at $16.761; US $ is trading lower vs. Euro & Yen.

Cash Markets

-- CIF Corn steady off 2. May +22 to +26, June +32 to +35, July +37 to +41,
Oct. +42 to +45, Nov. +42 to +46 Dec. +44 to +47

TREND:

The corn sell off was fairly dynamic late today. The lower trade was used by
many commercials as a chance to expand coverage. The lows came and went
pretty fast so that the best opportunity was fleeting. Following the
planting progress expect corn to firm again overnight as the recent trading
range remains intact. Not sure wheat keeps up with a lot of selling resting
above today’s highs. Beans may fall into the same category but with the
energy market on a tirade today moving crude and products moving into new
contract highs, expect the soyoil remain firm. This could support beans more
than wheat?

Most of this gain came from the weakness in corn prices but the strength in
the energy complex cannot be ignored. The chart below is the crude oil
contract. Note the signs of power with an island left on this last test of
support. Each day since that island was created has left the previous days
close until the market moved into new contract highs. This market cannot be
denied.



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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