Linn Group Morning Corn Comment

CHICAGO - Jul 1/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off sharply with the release of the USDA report on
Monday that showed a bigger increase in planted acres and more importantly,
a bigger increase in the stocks number.  The September and December
contracts closed down the 30 cent limit and were also down another 5-7 cents
based on the option synthetics.  The USDA said that corn acres actually
increased planted acres of 1.3 mil, but they left the harvested acres the
same which is probably their adjustment for flooding, but we won't have a
good idea of lost acres until the USDA re-interviews farmers in July for the
August report.  The bulls pointed to higher crude oil prices and that the
acreage number is in no way reflective of the floods that occurred in IA, IL
and MO and that either the planted acres or probably the harvested acres
number has to go lower.  The stocks number is telling us that we saw
reduction in demand back in May even before the $1.50 run up in corn prices
in June which is very bearish.  If we continue to see a reduction in demand,
which is almost certain with the increase of prices in June, we could end up
having a pretty big carry-in this fall which will add to this year harvest.
Volume was good at 320,000 contracts and funds were net sellers of 10,000
contracts, but remember, we were limit down for part of the session.

Overnight, corn opened lower as expected with the limit down move and traded
7-10 lower before selling off and making news lows right on the close early
this morning.  The crop condition report last night was had the
good/excellent slightly higher than last week, but that was expected so
probably a non-event.  The market is now focused on USDA report and what it
is telling the corn market.  The bottom line is that the bullish momentum
for corn is gone out the market as it appears demand is being cut
aggressively and the weather remains bearish.  We now are looking out toward
pollination and waiting to see if the weather turns hot/dry.  The current
forecast has normal to below temps and below normal precip which is bearish
the crops right now because many areas are still wet.  The corn crop is
small and not great, but it is better than it was 2 weeks ago.  Many farmers
would like to see some higher temps to kick start corn growth, but the
weather is ok.  Most traders I have talked to this morning are negative the
corn market as we have finally gotten the USDA report out of the way and
there doesn't appear to be any trouble on the horizon.  Look for corn to
continue to sell off today, but it could be helped by active pricing, higher
crude oil prices and stronger bean market.  The beans will struggle to stay
higher with both corn and wheat selling off, but that will also create
active bean/corn and bean/wheat spreading.  Corn will be called 10-15 lower
in-line with the close overnight.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                709^0    -15^6                 722^0    709^0    918

ZCU8                721^6    -16^0                 734^4    721^6    5949

ZCZ8                 741^4    -15^4                 754^0    741^4    13361

ZCH9                759^4    -14^2                 769^6    759^4    2176

ZCK9                770^0    -11^0                 777^4    770^0    10

Early Opening Calls: off 12-15c

Top News

-- 16,000 mt of Corn sought in July 3rd tender by group of Israeli buyers,
acc. to traders

-- 28,000 mt of Corn products & Soymeal sought in July 3rd tender by group
of Israeli buyers, acc. to traders

-- Feedmill group in Indonesia says soymeal imports may rise 5% this year as
demand will remain strong for the poultry sector.  The head of the industry
group also said they may import 200-300k mt of Corn for the remainder of
2008 despite earlier forecasts of better domestic output meeting local
demand.

-- With soaring prices of traditional corn varieties, S Korea may resort to
importing GMO corn for food purposes.  An official with the government
suggested they may import up to 1.2 mln mt, representing nearly 60% of food
sector corn imports.

-- USDA Corn weekly crop conditions for the latest week were vp-poor 11%;
fair 28%; good-exc 61% vs. last week's vp-poor 11%; fair 30%; good-exc 59%.
Corn silking was 3% up from last week's 2%, but well behind last year's 11%
& 5 yr average of 9%.

-- Monday's USDA Weekly Corn Inspections: 39.606 mln bu; expected 36.0 mln
bu

-- China's COFCO Ltd has bought a 5% stake in the Smithfield Foods.

-- Dalian Corn futures were off 6 Yuan to 1,929 Yuan/mt in overnight trade

-- eCBOT Corn Vol. 266,443 ; Pit Vol. 47,178 ; Open Interest change: -
21,631

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal Precip. Most of
the Corn Belt will be dry today. Wednesday into Friday will see scattered
showers and thunderstorms. Saturday and Sunday look dry. Temps normal to
below.

-- Outside markets. Energy +2.46 at $142.46; Gold & Silver: +6.7 at $934.8
and +0.047 at $17.488; US $ trading down vs. Euro and Yen

Cash Markets

CIF Corn steady off 2 . July +37 to +40, Aug. +32 to +35, Sept. +37 to
+40,Oct. +31 to +36, Nov. +32 to +36, Dec. +35 to +38, Jan. +30 to +37

TREND:

The corn chart has developed a top---my charts show a two day island left
with the jump into new contract highs last week. Those using the platform
charts do not show the island but show that we left trade. The limit move in
corn sets the limits tomorrow as 45 cents. Corn still has lots of length
there that could lead to more selling than anticipated here. The synthetics
in Dec corn were trading at 7.50 or about 7 cents below limit at the close.
Look for that level to trade in the night session. A close under the lows
last week at 7.38 would trigger another round of selling



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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