Linn Group Morning Corn Comment

CHICAGO - Jun 13/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Thursday after making new highs again
earlier in the session.  The corn market opened unchanged, 1-2 higher but
rallied to new all-time highs around noon, but profit taking came in and
sold the market off its highs.  The July contract closed up 5 ¾ and the
December closed up 6 ¾.  Nothing has changed in the corn market, the
fundamentals are still bullish, but at these prices and after the week we
have had, the market is going to find profit taking on rally’s unless we get
some fresh bullish news.  Export sales were released before the opening and
we respectable in the middle of the estimate as it seems that the higher
corn prices isn’t slowing demand yet.  The corn market is probably limited
right now with the weekend and the run up in prices this week.  In talking
to traders this morning, nobody is trying to sell the corn market, but on
rally’s, you will see traders that are long corn taking profits.  The
weather forecast right now shows a drier weather pattern in the 6-10 day, so
that should help many areas, but you still can’t forget that we have lost
acres in corn and those can’t be replaced because it is June 15th.  The
volume on Thursday was huge, over 500,000 contracts and funds were net
buyers of 10,000+ contracts by the end of the day.  Some of this volume was
index fund rolling of positions, but action in both the futures and options
pits was brisk.

Overnight, the corn market traded higher, with the December up over 12 cents
at one point overnight before settling almost unchanged from Thursday as
corn continues to run into profit taking on rally’s.  Nothing has really
changed in the fundamental picture for corn as some of the wettest areas in
the Midwest received more rain overnight, especially in the western corn
belt.  The heavy rain for the Midwest appears to be over for now which
should help reduce flood waters, but the current forecast is for lower temps
and sporadic showers which will hurt farmers chances for getting done any
late planting.  The market is discounting a reduction of 2 million planted
acres of corn from the USDA estimate of 86 mil acres and with the lower
yields, the world will need a strong wheat market to take up some of the
lack of corn production.  We would expect to start to see some rationing of
corn at these higher prices and could see a confirmation of that rationing
when we get the June 30th USDA report.  The corn market should open
unchanged this morning in-line with the close overnight and then look for
direction.  Currently, the outside markets have crude oil down and the US$
stronger.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                710^0    1^0                   722^0    709^2    6380

ZCU8                723^2    0^4                   735^2    722^6    1237

ZCZ8                 740^0    0^4                   752^6    739^4    5047

ZCH9                754^2    1^4                   765^0    752^0    153

ZCK9                758^4    -8^4                  770^0    757^0    93

Early Opening Calls: 1-3c better

Top News

-- EU 07/08 weekly corn import licenses rose by 442,000 mt, total 07/08 MY
import licenses granted stand at 14.1 mln mt, well up from year ago 5.3 mln
mt

-- Philippines Ag Sec says the gov't is very interested in doubling rice
stocks by year's end

-- Egypt GASC late on Thursday was looking to purchase 55k to 60k tons of
wheat, late July shipment

-- Corn futures on the Dalian exchange were lower, Jan fell 5 Yuan to 1,911
Yuan/mt

-- eCBOT Corn Vol: 415,269 ; Pit Vol.: 83,522 ; Open Interest change: +
31,864

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. Showers and thunderstorms move west to east across the Corn Belt
today. Showers end in the east Saturday. Sunday will see a few showers
favoring the west , Monday in the east. Temps near normal. The extended maps
call for a drier pattern for the Corn Belt. Not completely dry but much less
rainfall and coverage than what has been seen the last 2 weeks.

-- Outside markets: Energy complex -1.24 at $135.50; Gold & Silver -1.8 at
$870.4 and +0.079 at $16.566; US $ is trading better against Euro and Yen

Cash Markets

-- CIF Corn steady off 2. June +38 to +39, July +38 to +41, Aug. +32 to +36,
Sept. +36 to +40,Oct. +33 to +37, Nov. +34 to +39, Dec. +38 to +41

TREND:

The corn market is showing signs of rationing and it may take a more severe
proclamation about acres or potential yields to build a larger bull case
here. I will not give up the new crop bull spreads because the minute this
market sets back, it runs the risk of buying back demand.

Wheat should have a tough time here unless it is tugged higher by corn. As
harvest expands farmer selling will start to fill existing sales and start
to show more cash sales than we are seeing today. This market is already at
full carry so not much to do in the spreads except roll spot shorts forward.



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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