Linn Group Morning Corn Comment

CHICAGO - Jun 2/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Friday as corn rallied on the back of
active fund buying, short covering from Thursday and traders worried about
the crop condition report to be released after the close today.  This is the
first corn crop condition report released this year, about 2 weeks behind
normal because of late planting and it is expected to be friendly the corn
market.  As one trader said, how can you rate the corn crop when it hasn't
even emerged yet?  Corn sold off on Thursday as traders worried about the
CFTC stepping in and making sweeping changes that would inhibit index funds
from investing in the grain markets.  Friday's rally was fueled in part by
funds making month end adjustments and traders worried about crop
conditions.  Traders also looked at the outside markets as helping corn as
crude oil was strong and soybeans were very strong.  Argentina remains in
turmoil as farmers are not selling any grain and that is helping hold up
grain prices.  There is also talk of a lot of replanting going on,
especially in Iowa and Nebraska, but many of these areas are receiving rains
or received rains over the weekend delaying plantings.  Volume was average
at around 250,000 and funds were net buyers of 7,000+ contracts at the end
of the trading session.  Traders were also impressed with the export sales
which were within estimates, but continue to be strong with the higher
prices.

Overnight, the corn market traded in a small range and closed down app. 1
cent.  Traders this morning talking about the crop condition report that
will be released this afternoon, for the 1st time, after the close.  Most
traders expect this report to be friendly to corn and nowhere near last
year's 1st report of 78% good/excellent.  As much as 5% of the early corn
planted needs to be replanted and traders are being delayed by rains as much
of the Midwest received rains over the weekend.  Traders are also looking to
see if the grain markets are going to start to disconnect from the
energy/crude markets.  The corn market has been a follower of the crude oil
market for awhile now, but if the fundamentals for corn continue to be
friendly, corn could move higher regardless of what happens in the crude oil
market.  Many traders are starting to redo their supply/demand tables to
reflect a lower yield because of late planting season and trying to decide
if we are going to see close to the 86 mil acres planted that was forecast
back in March.  A lower yield from historical trend line will force either a
big reduction in demand or a big increase in prices.  Demand doesn't seem to
be decreasing significantly, so the change will probably come in higher
prices.  We would expect to see a choppy trade today as traders are
unwilling to take a large position until they see the report this afternoon.
Corn should open in-line with the overnight close, but unless there is
outside news, we don't expect much today.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                598^2    -1^0                  600^0    595^6    4053

ZCU8                612^0    -0^4                  613^0    609^0    392

ZCZ8                 625^6    -0^6                  627^0    622^6    2590

ZCH9                637^4    -2^4                  640^0    637^4    37

ZCK9                647^4    -1^0                  647^4    647^4    48

Early Opening Calls: off 1-2 cents

Top News

-- Active Jan futures corn contracts on the Dalian Exchange settled up 9
Yuan at 1,885 Yuan/mt.

-- Globex Corn Vol: 201,323; Pit Vol.: 35,509; Open Interest change: + 5,592

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt looks to have chances of scattered showers and
thunderstorms almost each day this week. Temps look to be normal to above.

-- Outside markets: Energy Complex -1.00 at $126.35; Gold & Silver: +6.5 at
$893.6 & +0.003 at $16.876; US $ is trading slightly better vs. Euro & is
slightly lower vs. Yen.

Cash Markets

-- CIF Corn up 1 to 6. May +26 to +29, June +27 to +30, July +36 to +37,
Aug. +33 to +35, Sept. +38 to +40,Oct. +34 to +37, Nov. +37 to +40, Dec. +39
to +43

TREND:

Want to maintain long corn and short wheat trade is some manner---talked
about option trade this week. Long wheat puts and short corn puts works in
down board only. Long corn calls and short wheat calls works only in an up
trending market. Corn/Wheat works in both ways.

The corm market really damaged the outlook with the extreme weakness on the
week but stays in the basic trading range that has lasted for the last 3
months. Still feel any break out the bottom will be short lived. The
fundamental picture of late planted corn and some reduction in acres puts
the onus on yields to maintain supply next year---highly unlikely that we
can get good yields with this start?



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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