Linn Group Morning Corn Comment

CHICAGO - May 13/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off on Monday in anticipation of better than expected
crop progress numbers and a drier forecast this weekend and next week.  Corn
closed 12-15 lower yesterday with the December closing 12 ¼ and July closing
14 ½ lower.  Traders also pointed to liquidation of corn/wheat and corn/bean
spreads, which have been popular, as part of the reason for the weakness in
the corn market.  The corn market is still above $6 and at these high
prices, you are going to see profit taking and traders are going to need to
see a specific reason to step up and buy corn at these prices.  Even with
the drier forecast, weather should still remain supportive of the corn
market because many areas are still wet and the cold weather doesn’t seem to
be going anywhere for much of the Midwest.  The current forecast is still
less than ideal, the forecast is just better than it was a couple of days
ago.  Volume was light compared to the last couple of weeks and funds sold
5,000+ contracts by the end of the session.  The corn market didn’t get the
bounce that many traders wanted to talk about in the middle of the session.
Outside markets were also lower with crude oil down almost $2.00.

Overnight, corn continued to back of the all-time highs from last week as
most forecasts now confirm weather forecasts that are conducive to planting.
Not great/ideal conditions for planting but the outlook is better than it
was 2 days ago and we are trading weather right now.  Traders were also able
to look at the crop progress report which was in-line with expectations.
The market probably told you the report wasn’t going to be bullish with its
action at the end of the day yesterday.  Corn is 51% planted vs. 27% last
week and 77% 5yr average.  The market is still way behind and it is hard to
catch up under even ideal conditions at this point.  In looking at the state
by state, Illinois lagged by 28%, Iowa by 36%, Missouri by 49%, Minnesota by
50% and Wisconsin by 31% vs. the 5yr average and some of the northern areas
are expected to get more rain this week.  The corn market looks like it is
going to have trouble right now with better crop planting weather and
traders unwilling to buy corn up here at these lofty levels.  We could also
see some further liquidation of the corn/wheat spread which has been a
popular spread the last couple of weeks and that will help push corn lower.
The corn market should open lower today and then look for direction.  If the
corn market gets another 10-15 cent break today, it could be in for a
correction.

 Globex Overnight

Contract            Last      Net Change       High      Low

ZCK8                599^0    -4^4                  602^0    599^0

ZCN8                611^0    -3^6                  614^6    608^2

ZCU8                622^2    -4^4                  626^6    620^4

ZCZ8                 633^2    -4^4                  637^6    630^4

ZCH9                644^0    -5^2                  649^0    643^0

Early Opening Calls: 3-5 lower

Top News

-- Monday's Corn planting progress showed 51% had been planted in latest
week, up from 27% last week & well behind last year's pace of 71%.  With
plantings behind schedule, the % of corn emerged is also low, the latest
report shows 11% has emerged, while last year's pace was 32% & 5 yr avg pace
is 33%.

-- Monday's USDA Weekly Corn Inspections: 34.263 mln bu; expected 37.5 mln
bu

-- Malaysia's official news agency reported the country's rice buying
company purchased 200,000 mt of Thai rice.  Head of the Malaysian rice
company say 100,000 mt were for 5% broken, while the other 100,000 mt were
15% broken

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

-- 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

-- Jan Dalian Corn futures fell 14 to settle at 1,969 Yuan/mt in overnight
trade.

-- Globex Corn Vol: 186,647; Pit Vol.: 25,759; Open Interest change: - 6,763

-- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Below Precip.
The western Corn Belt will see some showers today with the east seeing
scattered showers tonight and Wednesday. Thursday into Sunday looks dry.
Temps normal to below.

-- Outside markets: Energy Complex -0.20 at $124.03; Gold & Silver: -15.4 at
$869.5 & -0.206 at $17.009; US $ is trading better against both Euro & Yen.

Cash Markets

-- CIF Corn off 1 to 3. May +10 to +15, June +22 to +23, July +33 to +36,
Aug. +34 to +37, Sept. +36 to +43,Oct. +38 to +42, Nov. +38 to +43 Dec. +41
to +45

TREND:

There is not much to say about the trade except that the market will chase
out the traders with the least conviction---and take money away from those
that get bull headed. Hope my stand in corn/wheat does not fall into this
category. One more time discouraged adding on the correction today but
maintained old positions looking for corn to gain on wheat.

Did encourage users to take on a little more corn ownership on the break. I
know May rallies are hard to maintain but feel the corn story continues to
be one of extreme risk to the ones without coverage. Cash basis is telling
us that there is plenty of corn. Lack of export demand for a moment says
there is resistance at the current price levels. EU wheat competing at some
destinations for this fall and winter may be behind some of this but $6.25
corn has a lot to do with it as well.



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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