Linn Group Morning Corn Comment

CHICAGO - May 7/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market reacted differently on Tuesday on to the wet weather and
delayed planting as the corn market closed 10-12 higher, but well off the
highs.  The corn market was 25-30 cents higher at one point in the session,
but it couldn't hold the gains as traders took profit as the day progressed.
The corn market has had a hard time holding gains the last couple of weeks
as traders/farmers get worried about getting corn in the ground, but then
they realize you can't kill the corn crop in April/May.  Farmers aren't
worried enough that they are planting corn in mud, but many farmers I have
talked to across the country are planting corn in marginal ground that in
years past they would have waited to plant and that is the good fields.  The
outside markets were also supportive of corn as the crude oil and metal
markets all surged with crude oil up another $2.00.  The weather forecast is
calling for continued rain and t-storms across most of the Midwest that will
slow planting and delay some farmers from getting into the fields.  Long
range forecasts are more conducive to planting corn, but it may be too
little too late.  Traders/speculators are also worried about the political
backlash of the ethanol mandates as it seems like daily we have a
politician, not from the Midwest, going on TV and saying we need to get rid
of ethanol rebates.  Volume was good at over 300,000 contracts and funds bot
6,000+ contracts on the day.

Overnight, corn was higher, but closed off the highs about 3-4 higher.  That
sounds like a broken record, but that seems to be the theme in the corn
market right now until we have a breakout of the recent trading range.
Export sales will be released tomorrow morning and will probably be lighter
than expected.  The US$ is much stronger this morning and that will weigh on
the grain markets because it makes US exports less competitive.  The corn
market today should see a continued choppy trade with the market opening
higher, but it will probably have trouble rallying.  I don't think there is
any doubt we are going to get the corn in the ground, it is just late and
traders are worried about yield reductions, but you won't know until the end
of the summer.  Now, if we get the hot/dry weather at a bad time during
pollination that could really accelerate the corn market.  This is the first
time in the last couple of years that farmers have had trouble getting crops
into the ground.  The corn market is called to open higher, but calls will
be determined much closer to the opening as the calls have changed in the
last 3-5 min the last couple of days.  Current condition tell you to trade
the ranges and make the market break out and prove you wrong.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                601^0    6^2                   602^6    599^4

ZCN8                609^6    3^4                   615^0    606^2

ZCU8                619^6    3^6                   624^2    616^0

ZCZ8                 627^0    3^4                   632^6    623^4

ZCH9                637^6    3^4                   642^4    634^2

Early Opening Calls: 3-5 cents better

Top News

**StatsCan Mar 31: Oat Stocks: 2.0 mln mt; expected 1.9 mln mt

**StatsCan Mar 31: Barley Stocks: 4.5 mln mt; expected 4.44 mln mt

-- Analysts expect Friday's USDA report to show Corn ending stocks at 1.32
bln bu. vs. year ago month 1.304.

-- Turkish media is reporting that its state grain board has said it will
import 150,000 mt of Corn.  The Ag ministry also said if recent rains
continue it will improve the prospect of local crops.

-- While its mulling over requests of rice exports from neighboring
countries at diplomatic level, India's food ministry says export
restrictions will remain in place for the time being.

-- 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

-- January corn futures on the Dalian exchange were 6 Yuan higher at 1,974
Yuan/mt.

-- Globex Corn Vol: 282,482; Pit Vol.: 25,397; Open Interest change: - 5,094

-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip.
The Corn Belt will see scattered showers and storms today into Thursday.
Friday and Saturday look dry. Sunday will see scattered showers. Temps near
to below normal.

-- Outside markets: Energy Complex -0.12 at $121.72; Gold & Silver: -11.2 at
$866.8 & -0.304 at $16.559; US $ is trading slightly better vs. Yen & is
better vs. Euro.

Cash Markets

-- CIF Corn off 1 to 3. May +19 to +22, June +32 to +34, July +38 to +40,
Oct. +42 to +44, Nov. +40 to +44 Dec. +43 to +47

TREND:

The corn market came back to test the upper end of the recent trading range.
Still range bound unable to take out those highs. It will happen eventually.
Much of the strength today came on the planting delays but there is also
speculation as to what the report will say on Fri. The USDA will have to be
very creative to prevent a negative carry out in corn. Expect them to expand
wheat feeding around the world a lot to reduce corn demand some. The avg
guesses on the report are shown below.



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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