Linn Group Morning Corn Comment

CHICAGO - Jun 6/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market finally recognized the field conditions and the current
weather forecast is for real and it exploded into new highs and closed
strong right at the highs.  The July, Sep and December all closed at least
28 cents higher, but did not trade limit up, 30 cents higher.  All three
months closed at new all-time highs.  Heavy rains fell through most of the
Midwest and the forecast is for heavy rain and thunderstorms to continue
through the beginning of next week.  These rains are causing heavy
replanting, if they can, which will cause a reduction in acres and a
reduction in yield because of the late planting.  Traders have been talking
about the corn market staying in this trading range and when it broke out it
would be explosive and that is what we saw yesterday.  Some traders want to
start to talk about a sub 150 yield which even with a big reduction in usage
will still make the carryout very small, maybe even negative.  Export sales
yesterday were good, but largely ignored.  These new contracts highs are
very important and probably chased out any of the shorts that have been
trying to keep their positions.  Volume was active and funds bot 8,000
contracts on the day.

Overnight, corn continued to move higher with most contract months up 2-4
cents.  The outside markets this morning are explosive with crude up over
$6.00, gold up $20, the US$ down 30 pts, and unleaded gas up 20 cents.
These explosive moves in the outside markets will only add to the explosive
nature of the corn market.  Remember, today is Friday, we are going in an
uncertain weekend when the weather is forecasted to be detrimental to crops
in most of the Midwest.  We could see some profit taking if corn really gets
up and going this morning early, but beware of a higher move late in the
day, especially if we get a break off of early highs.  I don't know anybody
that wants to go short into this weekend.  These markets are very volatile,
very dangerous.  Big profit, bigger risk.  The options are a great way to
play the corn market right now, consider using call spreads with the first
leg at the money.  I wouldn't be surprised if we see the exchange raise
margins over the weekend if we get another explosive day today.  This is
bullish, not bearish the markets as it will force many short hedgers out of
positions.  The market should open better than where it closed overnight and
I wouldn't be surprised if corn opens 10 higher.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                646^0    2^6                   649^2    641^6    4236

ZCU8                658^4    2^4                   661^4    654^4    1511

ZCZ8                 673^0    2^2                   676^0    668^6    2923

ZCH9                687^0    1^6                   690^0    683^2    204

ZCK9                696^0    3^6                   696^0    691^6    24

Early Opening Calls: 3-5c better

Top News

-- Spanish feed manuf. estimate 07/08 corn, wheat, barley carryover stocks
at 4.5 mln mt vs. 2.1 mln mt seen in the same period a year ago.

-- Total import Corn licenses granted by the EU this week were 292,000 mt.
Season total climbed to 13.7 mln mt compared to last year at the same point
when they had only imported 5.1 mln mt of Corn

-- Head of Dow Agroscience division expects seeds to provide larger chunk of
revenue, says its DHT trait corn to be on the market by 2013 & DHT Soybeans
the following year.

-- Jan Dalian Corn futures rose 19 Yuan in overnight trade to 1,905 Yuan/mt

-- eCBOT Corn Vol: 342,109 ; Pit Vol.: 44,374 ; Open Interest change: +
15,288

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt will see showers and thunderstorms today into Tuesday.
The northern areas will be favored to receive the heaviest rainfall amounts.
Temps above normal.

-- Outside markets. Energy +2.83 at $130,62; Gold & Silver: +11 at $883.1
and +0.076 at $17.244 ; US $ down against the Euro and better vs. the Yen

Cash Markets

-- CIF Corn steady off 3. June +30 to +34, July +38 to +40, Aug. +33 to +36,
Sept. +37 to +41,Oct. +37 to +42, Nov. +37 to +42, Dec. +40 to +47

TREND:

Weather inspired trade continued to firm beans. Corn into new highs and
shows no signs of slowing.

Wheat got tugged along and developed some of its own strength. A close over
8.00 in WN will have me exiting all short wheat positions in spreads. Flat
price covered earlier this week on fear of the corn and bean rally.

Beans also begin tugged along---but developing a real concern about lost
acres so that the rally has legs. Meal led today with moves set to take out
old highs and extend the gains. Oil came back to life today and the rally in
crude after the close should keep that market very strong. Crude was up 2.00
on the grain close but rallied to 5.00 plus higher later.

Bean spreads firming but again set back on the close with index fund bear
spreading. The meal spreads are showing the same formations and should start
to gain --- this market does not have the fund participation to weaken the
spreads.



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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