Linn Group Morning Corn Comment

CHICAGO - Jun 11/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market soared to new highs on Tuesday as the USDA shocked the
market with a 5 bushel reduction in estimated average yield at 148.9.  The
marketplace had been talking about 148-150 average, but almost nobody
expected the USDA to reduce the yield estimate in the June report.  Corn
started strong, up 10 cents but then drifted lower as beans sold off, but
recovered late and made new highs closing right up against the highs.  The
July, Sept and December contracts all closed 16-17 cents higher by the end
of the session.  The USDA estimated corn production at 11.773 bil bu which
is down from the March and April estimate, but the USDA is still using 86
mil acres.  Many traders/analysts pointed out the data for this report is
already 7-10 days old and isn't taking into account the lost acres from last
week so now traders are talking about 84 mil acres instead of 86 mil which
if the yield estimate is correct, will lower production even further.  If
the USDA is right in its production numbers, the ending stocks would be 673
which is the lowest in 13 years and would represent only a 3 week supply.
Weather is still the focus for the corn market as more rain is called for
this week and this weekend.  Corn seemed to separate itself from the outside
markets yesterday as crude oil was down over $3 and the US$ was very strong.
The volume was very strong at 366,000 contracts and funds were net buyers of
9,000+ contracts by the end of the day.

Overnight, the corn continued the rally that started late in the session
yesterday as traders are worried about lost corn acres and decreased yields
because of the late start and bad growing conditions.  The July and December
contracts both closed over 10 cents higher, a little off the highs, but
still strong considering the market was up over 17 cents yesterday.  The
USDA really shocked the market yesterday with its yield reduction and many
traders thought we would see a bigger reaction right on the opening and when
we didn't get it, they became hesitant.  When the market turned later in the
session and started moving higher, some traders may have been caught off
guard and had to buy corn.  Remember, many traders have been trying to trade
corn from the short side, selling new highs.  Now is not the time to
probably fight the corn market going higher as it could really be dangerous.
We have been recommending call spreads so we can define our risk.  Corn is
at a very interesting time right now as it is making new all time highs and
nobody really know what our acres or yields are going to be this summer.
The corn market should open stronger, inline with last nights close.  Be
careful if corn opens a lot stronger as we could see profit taking, but
nothing fundamentally has changed in corn, it is still a strong market.
Weekly export sales released tomorrow morning.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                683^4    10^2                  686^4    673^2    6251

ZCU8                697^0    10^2                  700^0    686^6    1812

ZCZ8                 713^2    10^4                  716^0    703^0    5722

ZCH9                728^2    11^2                  729^6    717^0    722

ZCK9                734^4    12^2                  734^4    721^0    15

Early Opening Calls: 8-10c better

Top News

-- France's stats arm lowered their 07/08 corn ending stocks to 2.819 mln mt
from the prior estimate of 2.971 mln mt

-- Corn farmers in S Africa made silo deliveries totaling 458,000 mt vs. the
356,000 mt in the prior week

-- At its SBS tender on Wednesday, Japan's ag ministry said it only bought
82,000 mt of feed barley & just 9,000 mt of feed Wheat. Both volumes were
well below the targets of 300,000 mt & 63,000 mt respectively

-- OPEC's Sec General says $200 price forecasts are not based on
fundamentals, says there is a feeling of panic in the oil markets & they
should just calm down

-- OPEC's Sec General says extremely high oil prices are not in the interest
of cartel members

-- Corn futures on the Dalian Exchange fell 3 Yuan to 1,909 Yuan/mt

-- eCBOT Corn Vol: 312,769  ; Pit Vol.: 58,657 ; Open Interest change: +
11,962

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to below
Precip. The Corn Belt will see scatters showers and thunderstorms today into
Friday. The heaviest amounts and coverage will favor the west and north.
Saturday and Sunday look dry Temps normal to above.

-- Outside markets: Energy complex +2.60 at $138.91 ; Gold & Silver +8.8 at
$876.7 and +0.076 at $16.691 ; US $ is trading lower vs. Euro and Yen

Cash Markets

-- CIF Corn steady 7. June +34 to +39, July +35 to +39, Aug. +30 to +36,
Sept. +35 to +42,Oct. +34 to +37, Nov. +35 to +39, Dec. +39 to +41

TREND:

Wheat continues to short cover. Cash is diverging with lower protein hard
wheat offered down hard. Soft wheat feels sold out as buyers would like to
capture some of this wider premiums.

All we did today was gain back what was lost yesterday. Still feel there
will be another round of buy stops if this market can get over 8.44 but I
remain very bearish and will sell rallies in this market.

Corn shows no signs of setting back from this rally with small breaks well
supported by consumers extending coverage. Upside targets are very difficult
to identify but $7.25 to 7.35 on a front month look to be nominal. I
continue worried about a much larger rally and am trying to keep the top
side open.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.