Linn Group Morning Corn Comment

CHICAGO - May 9/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market rallied into new highs as traders are finally starting to
get worried about planting delays and there is some talk of elevators
covering farm hedges because of the high prices and the lack of bank
financing.  Corn closed 16-17 higher, only 2-3 cents off the highs.  There
seems to be a lot of corn planted over the last 5-7 days, but the rain
started falling on Wednesday across most of the Midwest, stopping planting
progress, and more rain events are forecast for next week.  We are
approaching the magic May 15th number and traders/farmers are starting to
look at yield reductions on acres planted after this date.  In addition to
corn not getting planted, some of the corn already planted will have trouble
because of the heavy rains and the cool weather forecast which won't allow
the planted corn to germinate and get out of the ground.  Traders also were
looking ahead to the supply/demand report to be released on Friday morning
with most looking for a bullish report and wondering how the USDA can
massage the numbers so corn isn't at a negative carryout for 08/09.  The
USDA really has no idea on acres planted yet, so the big question will be if
they are going to change the yield estimate with some traders looking for a
decease from 155 to 151 in yield estimates. Volume was respectable at over
300,000 contracts and funds bot 3,000 contracts.

Overnight, the corn market continued the rally that started on Thursday
during the day session with the July and December closing almost 9 cents
higher.  The USDA released the April supply/demand this morning and 07/08
carryout was estimated at 1.383 vs. 1.311 analyst estimate and 08/09
carryout was estimated at 763 vs. analyst estimate of 685.  The USDA kept
the acres the same but lowered yield to 153.9 from 155 estimate in March.
They based this yield on 10 yr average of acres planted by the middle of
May.  Traders thought the USDA is too high on their yield estimate because
of the expected acres planted by May 15th isn't going to happen.  The
weather forecast continues to show rain and in talking to farmers today,
most have had to stop planting corn by the rain or are planting in the mud.
I talked to one farmer today that said he has had to drag planters out of
fields, he isn't happy about planting in the mud, but he has to get
something in the ground because of insurance.  The corn market was overnight
and we expect the market to continue that trend today and open 5-10 higher,
maybe higher.  The big question is who is going step out and fade a corn
rally right now with it raining in the Midwest, more rain this weekend, and
another front expected the middle of next week.  The market could rally
today on a lack of selling as much as big buying.  Exciting times, but also
dangerous.

Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                627^0    8^2                   627^0    617^4

ZCN8                639^0    8^6                   639^0    628^4

ZCU8                648^0    8^2                   648^0    638^0

ZCZ8                 654^4    8^2                   655^0    645^0

ZCH9                665^0    8^2                   665^0    656^0

Early Opening Calls: steady, 5 cents better

Top News

**US May Corn 07/08 Carryout:  1.383 bln bu.; est. 1.31; Apr Rpt 1.238

**US May Corn 08/09 Carryout:  0.763 bln bu.; est. 0.69

**World 07/08 Corn Carryout: 109.69 mmt

**World 08/09 Corn Carryout: 99.03 mmt

**May China 08/09 Corn Output: 150.0 mmt

**May China 07/08 Corn Output: 145 mmt; Apr Rpt 145.0

**May Argentina 08/09 Corn Output: 23.5 mmt

**May S Africa 08/09 Corn Output: 11.5 mmt

-- US Sec. of Ag Schafer says proposed farm bill legislation has too much
spending & doesn't adequately reform subsidies to farmers & Pres. Bush will
likely veto the bill in its current form.

-- CBOT May Corn Delivery: 517

-- Turkish media is reporting that its state grain board has said it will
soon tender for import of 150,000 mt of Corn.

-- May 8th is deadline set by Tunisia grain buying arm for a fresh 101,000
mt of optional origin Milling Wheat.  They're also seeking 25,000 mt Barley
with bid deadline on same date, acc. to traders

-- 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 Dalian Corn futures rose 5 Yuan in overnight trade.  They settled
at 19,79 Yuan/mt

-- Globex Corn Vol: 248,758; Pit Vol.: 42,639; Open Interest change: +
24,780

-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip.
The western Corn Belt will see some showers and thunderstorms today.
Saturday is mostly dry. Sunday will see showers and thunderstorms west to
east. Dry Monday. Temps below normal.

-- Outside markets: Energy Complex +1.99 at $125.68; Gold & Silver: +4.1 at
$886.0 & +0.137 at $16.933; US $ is slightly lower vs. Euro & is trading
lower vs. Yen.

Cash Markets

CIF Corn off 1 to 3. May +?? to +20, June +23 to +26, July +33 to +35, Oct.
+38 to +41, Nov. +39 to +43 Dec. +41 to +46

TREND:

The corn market broke into new contract highs today and held that trade into
the close. Crop report in the AM. USDA has to be real creative to stretch
corn supplies. The corn/wheat trade continued to work even after giving a
chance to add to 20 cents higher during the day.

The surprise tomorrow may be the larger usage estimated for wheat



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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