Linn Group Morning Corn Comment

CHICAGO - Jun 10/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn futures moved higher again on Monday as most of the Midwest
received rains over the weekend and the forecast for more rains this
weekend.  Many of the hardest hit areas are the places that haven't been
able to get corn planted or have had to replant and are now under water.
The corn market closed off the highs, but still up around 7 cents in most
months, but traders are nervous about the USDA supply/demand report that
will be released before the opening this morning.  Weather remains the focus
of the corn market as rains continue to soak most parts of the Midwest.
Many corn acres that are not planted, will not get planted and may be
switched over to beans or farmers may opt for the insurance because there
probably won't be much work getting done over the next week.  Traders
attributed the sell off late in the day as traders taking money off the
table in front of the USDA report after a run to new highs on Sunday night.
Traders said a reduction in corn yield and a reduction in corn acres was
factored into prices.  Volume was moderately strong at app. 300,000
contracts and funds were net buyers of 7,000+ contracts.

Overnight, the corn market closed 2-3 higher as it continued to move higher
as traders got more data on crop conditions.  The crop condition report
showed corn dropped 3% on good to excellent with the market looking for a
reduction of 5-7%.  This number upfront looks a little negative, but if you
look at the state numbers, it doesn't look as bad as some of your big
producing states got huge rains over the weekend and are expecting rains
again this week.  The big news this morning is the USDA supply/demand report
that reduced the yield estimate to 148.9 which is 5 bu lower than their
original estimate and 6 bu lower than 5 yr average yield.  This number is
completely unexpected as traders have been talking a 148-150 yield, they
just didn't expect the USDA to lower the estimate this early in the season.
The USDA left the acreage number the same, as expected, but in talking to
different traders/analysts, they feel that we have lost 2 mil corn acres
taking us down to 84 mil acres.  At 86 mil acres, the USDA is expecting a
carryout of 763 mil bu which is about 3 weeks usage.  None of these numbers
should shock the market, but it does give some of the bulls more ammunition
and should justify them keeping their positions.  Corn closed 2-3 higher
overnight, but I would expect the market to open 5-10 higher, maybe even
higher if we get some momentum.  The crude market is higher this morning,
but so is the US$, so that might be a wash.  Be careful of a big run up
early in the session as there could be some profit taking.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                660^0    2^6                   662^4    655^2    5163

ZCU8                671^0    0^4                   675^4    668^4    1434

ZCZ8                 687^6    2^4                   690^6    683^2    4230

ZCH9                702^4    3^2                   704^4    698^0    285

ZCK9                704^6    0^0                   711^0    704^6    177

Opening Calls: 7 to 10c higher Post Report

Top News

**US Jun Corn 08/09 Carryout: 0.673 bln bu.; est. 0.74; May Rpt 0.763

**US Jun Corn 07/08 Carryout: 1.433 bln bu.; est. 1.41; May Rpt 1.383

**World 08/09 Corn Carryout: 103.0 mmt; May 99.0

**World 07/08 Corn Carryout: 121.09 mmt; May 109.7

**Jun China 08/09 Corn Output: 153.0 mmt; May Rpt 150.0

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

**Jun Argentina 08/09 Corn Output: 23.5 mmt; May Rpt 23.5

-- US Corn crop conditions in the good-excellent category were 60% vs. last
week's 63%, 31% were in fair condition this week vs. 30% last week and the
very poor-poor categories rose slightly to 9% from 7% last week. 89% of the
corn crop had emerged, yet remained behind last year's pace of 98% & 5 yr
avg pace of 95%.

-- Monday's USDA Corn Export Inspections: 36.315 mln bu

-- Dalian Corn futures in overnight trade were 7 higher to settle at 1,912
Yuan/mt

-- eCBOT Corn Vol: 254,422 ; Pit Vol.: 46,389 ; Open Interest change: +
1,670

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. The Corn Belt will see scattered showers and thunderstorms today
into Friday. Saturday and Sunday look dry. Temps normal to above.

-- Outside markets. Energy +3.09 at $137.44; Gold & Silver: -10.2 at $884.4
and -0.040 at $17.173; US $ is trading better vs. Euro and Yen

Cash Markets

-- CIF Corn steady off 1. June +27 to +33, July +34 to +37, Aug. +30 to +35,
Sept. +35 to +41,Oct. +34 to +37, Nov. +35 to +40, Dec. +39 to +44

TREND:

There should not be a lot of new positions gathering in the night session
prior to the report in the AM.

Wheat broke down on harvest activity and anticipation the crop is still
growing---here and around the world. This market is back into the congestion
zone---small one that we left last week. Should provide some support
initially unless there is some real bearish items surface in the production
est released in the AM. Take note that I see consumption going up hand in
hand with larger production est so this larger crops in US and World may not
be so bearish in the end. Cheap harvest time basis in soft wheat states has
cash wheat below corn bids?

Trade will adjust the USDA crop report tomorrow in line with weather changes



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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