Linn Group Morning Corn Comment

CHICAGO - Jun 5/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market moved higher as the rain kept falling across the Midwest
stopping most thoughts of continued corn planting and hurting corn that is
already in the ground.  The grain markets were led by the soybean market
late and the corn rally may have been muted by the sell off in the energy
markets as unleaded gas and crude oil were all much lower.  The July and
December contract closed over 6 cents higher, right on the highs of the day.
Heavy rains across the middle of the Midwest has caused flooding which has
prevented replanting of corn and drowned corn that was already planted.  The
weather forecast for the next 5 days calls for warm, humid temps and rain
showers across most of the area.  While the warm weather is welcome to
almost everybody because of the cold spring, the humid conditions will
create a greater opportunity for thunderstorms and bigger rains.  The volume
remains lighter than normal and choppy as traders wait and see if corn can
break out of the trading range it has been in since really the 1st of April.
Most traders feel that corn will remain in this trading range until they get
confirmation that we have a reduction in acres and/or a reduction in yields.
Most traders are still nervous that the CFTC will create further
restrictions that will limit trade.  Any major attempt by the CFTC to limit
trade will be detrimental to prices, at least in the near term.  Any
technicals or fundamentals will take a back seat, especially if funds have
to liquidate.  Volume was only app. 235,000 contracts and funds bot 3,000+
contracts.

Overnight, the corn market continued its move higher as the weather forecast
is calling for rain across most of the Midwest over the next 5 days,
especially in areas that are already saturated.  The USDA released weekly
export sales this morning that showed sales of 700,000 which was within the
estimate of 400,000 to 800,000.  Not exciting, but still strong despite the
higher prices.  Traders today will be looking to see if corn can get into
new highs and hold them.  Lately, new highs in corn have been sold
aggressively, especially if the new highs are made early in the session.
The wild card is the outside markets and the CFTC.  Many traders I have
talked to are nervous about putting on big long positions because of the
risk that the CFTC announces new restrictions and funds have to liquidate,
not because they want to but because they are forced to liquidate.  We have
all seen in the past what happens in markets where somebody is forced to
liquidate positions.  The corn market should open higher in-line with the
overnight markets and then look for direction.  As I keep mentioning, the
weather is not great for crop development right now as the rain keeps
falling with some important growing areas being drowned out and it is too
late to replant. We have two competing forces, the weather and the CFTC and
only time will tell which one will prevail.  Be careful trying to sell the
top of the range in corn this time as we could have an explosive mover
higher, recommend using Sept options to play the corn market right now.  Big
risk, big reward.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                620^2    5^6                   621^0    614^4    5644

ZCU8                633^4    5^6                   634^0    628^0    872

ZCZ8                 648^4    5^4                   649^0    643^0    5051

ZCH9                664^0    5^6                   664^0    658^0    167

ZCK9                671^0    6^0                   671^0    665^0    12

Early Opening Calls: Corn 6-8c Higher

Top News

**USDA Corn 07/08 Export Sales Net: 530,200 mt; 08/09 Net: 172,200 mt;
expected 450-750k mt Corn 6-8c Higher

-- Sugar industry exec says its unlikely Brazilians will turn away from
ethanol despite the recent oil discovery announced by the state run
Petrobras

-- Smithfield hog unit succumbs to high feed prices, unit weighs in on
company's lower quarterly profit.  Their 4Q profit fell to 2c eps vs. year
ago quarter of 33c/shr. Revenue was $2.87 bln vs. $2.39 bln yr ago.

-- Dalian Corn futures Jan 09 was 3 Yuan better and settled at 1,886
Yuan/mt.

-- eCBOT Corn Vol: 195,724 ; Pit Vol.: 30,234 ; Open Interest change: -
10,879

-- Weather 6-10 Day Forecast: Normal to Above Temps. Normal to Above Precip.
The Corn Belt will continue to have chances of showers and thunderstorms
today into Saturday. Sunday and Monday look dry. Temps warm to above normal.

-- Outside markets. Energy -0.02 at $122.30; Gold & Silver: -12.4 at $867.5
and -0.077 at $16.867; US $ trading worse against the Euro and better vs.
Yen

Cash Markets

-- CIF Corn steady up 8. June +33 to +36, July +41 to +44, Aug. +32 to +35,
Sept. +36 to +39,Oct. +39 to +40, Nov. +42 to +47, Dec. +42 to +47

TREND:

The weather is everything now and traders that have a knowledge of the way
crops respond will be very anxious as the storms this week and next develop.
We are losing acres of corn already planted as well as preventing some from
being planted for the first time. This is test number one of the crop
potential. The next will come with high temps.

The surprise may be that it drives beans faster than corn.

Weather is also important to wheat. There were multiple reports today of 95
to 100 degree temps with 20 to 25 mph winds that will bring on southern soft
wheat as well as hard wheat quickly.



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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