Linn Group Morning Corn Comment

CHICAGO - Jul 3/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market surged higher on Wednesday, surprising many traders as corn
went limit up in the last minute of trading.  The July, Sept and Dec all
closed just below limit up of 30 cents today as the market put some weather
premium back in the corn market and traders were caught short at the end of
the day and had to cover positions.  Funds were the big story on the day as
they bot an estimated 12-15,000 contracts with half of that total coming in
the last 15 min of the day.  This late rally in the corn market left many
traders shaking their heads and they were unable to cover positions.  The
corn market opened lower in-line with the overnight close and then found
buying, probably commercial pricing, and never really looked back.  The corn
market seems to find commercial buying on any break as of late.  The corn
market also found support in the weather forecast for hot/dry weather next
week which could be dangerous for crops that has a shallow root system
because it has been so wet.  Whether or not this forecast comes true, the
corn market is nervous about any more stress on the crop.  The corn seems to
have improved a lot over the last couple of weeks, but it is still behind
and vulnerable.  The threat of hot/dry weather has to be monitored, but it
is still out in the future and the forecast can change and probably will by
next week.  The volume was only 280,000 contracts yesterday which was lower
even with the big move which probably tells us it might have been a little
exaggerated.

Overnight, the corn market closed down 7-8 cents which wasn't surprising
with the big move higher at the very end of the day.  The corn market had a
big trading range overnight with December having a 15 cent range.  Weekly
export sales released this morning were within the range of estimates, but
still below the 4-week average.  Weekly export sales were 628,000 but it was
still 20% below the 4-week average.  Having weaker export sales isn't
exactly unexpected this time of the year, but still seeing weaker export
sales is just another indicator that demand is weakening.  The corn market
today should see some choppy two sided trade as traders position themselves
in front of the 3-day weekend.  I would expect to see corn open lower today
on profit taking from the surprise rally yesterday and then it will look for
direction.  I don't expect traders to take any big positions into the
weekend as a slight change in the forecast over the weekend could make the
Sunday night trade very interesting.  Expect traders to watch the mid-day
forecast before deciding what they are comfortable with for positions into
the weekend.  The weather forecasts now become the major difference maker in
corn prices.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN8                740^6    -8^0                  751^4    737^0    128

ZCU8                753^4    -7^4                  763^4    748^4    3674

ZCZ8                 772^6    -7^6                  783^0    768^0    9292

ZCH9                789^2    -8^4                  800^0    786^4    147

ZCK9                800^0    -6^6                  808^6    800^0    5

Early Opening Calls: off 5-7c

Top News

**USDA Corn 07/08 Export Sales Net: 325,900 mt; 08/09 Net: 302,500 mt;
expected 400-650k mt

-- China's Premier says his country has set out the goal of becoming 95%
self sufficient in feeding its fellow countrymen & hopes to expand grain
production to 540 mln mt on an annual basis by the year 2020.

-- CEO of Cargill tells Russian business paper that his company would be
willing to invest an additional $1 Bln in Russia based on the fact he
believes Russia could increase its annual grain production by 30-40 mln mt
from current levels.  But conceded it could take 8 or more years to achieve
that goal.

-- Minister of India's Foreign Trade office has reportedly halted the
exports of Corn until Oct 15, 2008

-- CBOT July Corn Deliveries assigned: 559

-- Jan Dalian Corn futures were unchanged in overnight trade at 1,929
Yuan/mt

-- eCBOT Corn Vol. 236,100 ; Pit Vol. 44,022 ; Open Interest change: - 1,620

-- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to Above Precip.
The Corn Belt will see scattered showers and thunderstorms today into early
Saturday. Sunday looks dry. Monday will see a return of chances of scattered
showers. Temps normal to above.

-- Outside markets. Energy +1.75 at $145.32; Gold & Silver: -11.7 at $934.2
and -0.189 at $18.234; US $ trading better vs. Euro and Yen

Cash Markets

-- CIF Corn steady off 3 . July +22 to +24, Aug. +29 to +31, Sept. +35 to
+39,Oct. +31 to +35, Nov. +31 to +35, Dec. +34 to +39, Jan. +30 to +37

TREND:

Strong closes across the floor. We have a new high close in beans as for the
third consecutive session we saw heavy fund type buying on the close. Expect
to see some scale up selling between 16.40 and 16.50 basis the Nov as we
near short term targets. A sustained trade above this level opens the door
for a possible another bull leg. Upside counts in beans could be very
dynamic with another 2.00 possible. Entering a three-day weekend anything is
possible, so if we get a break of 50 cents look to be a buyer. Meal is
another market that has a new high close, but like the beans, we have
rallied right up to short term targets of around 430.00 basis the Dec. We
should begin to see some scale up selling at this level, but would not be
surprised to see another strong day to end the week. Upside counts in meal
could be very dynamic with targets of over 500.00. Expect buying on breaks
back at the 410.00 area. Oil has left the 68 cent area and 69 area in one
day. Look for selling on rallies above 70.25. Expect buying on breaks from
68.50 down to 68.00.

Corn market put the element of weather in it today. The 6 to 10 day, shown
above shows above normal temps for all. Taking out the contract highs and
sustaining it, opens the door for another major upside move. After a limit
down move on Monday and another round of sell stops triggered yesterday,
today we got the buy stops. LIMITS IN CORN TONIGHT AND TOMORROW WILL BE 45
CENTS BECAUSE OF THE LIMIT SETTLE IN THE MAY(09) AND JULY(09) CONTRACTS.

Basis weakness in wheat makes rallies suspect. Weakness in protein basis was
responsible for the Mpls weakness today. Look for rallies to be supported
from the corn market as it will carry wheat on further strength. We should
start seeing problems above 9.00 basis the Sept. Wheat/Corn spread is moving
back into new lows. Still like this trade.



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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