Linn Group Morning Corn Comment

CHICAGO - Oct 2/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Wednesday as the rally that we saw most of
the day failed late in the day as sell orders came into the marketplace.
The December contract closed down 3 ½, but it was higher most of the day
only selling off the last 20-30 min of the session. The market seemed to
find some support on over sold conditions, but when you look at the big
picture, nothing has changed fundamentally and the technicals just look
terrible.  The reduction in demand for grains across the world because of
the financial turmoil has helped pressure the grain markets along with the
much stronger US$ as Europe is fighting about whether or not they want to
issue their own bank bailout package.  The weather remains bearish as there
isn’t really a chance for frost/freeze for at least another week except for
the far northern areas.  The crude oil was lower as well putting pressure on
corn, but it did close well off the lows.  The volume was light at 180,000
contracts and funds were net sellers of 3,000+ contracts.

Overnight, the corn was pretty quiet with only a 6 cent range and closing
about unchanged.  FC Stone came out with their crop estimate after the close
yesterday at 12.026, with a yield of 151.7 bu which was below their
September estimate of 12.159.  Weekly export sales released this morning
were in line with expectations, see below, but these have gone largely
ignored by the market lately.  With the October crop report to be released
next week, we will start to see different firms this week put out estimates.
It seems like this fundamental information is taking a back seat right now
to the financial situation and the outside market in affecting grain prices.
The corn market is expected to open lower this morning as we have seen the
US$ move much higher since the grains closed and the crude oil is lower on
the day.  The Senate passed the bailout package overnight and the House is
expected to vote again tomorrow where it has already failed once.  Traders
said in the back of everybody’s mind is what happened on Monday when the
House failed to pass the bill.  The fundamentals are not really playing a
big part in the price movement in corn right now, it is the outside markets,
so watch the crude and US$ for indications.  I believe we are down into
insurance levels after the close yesterday, so that could ease up some of
the selling pressure, but remember, the funds don’t care about insurance
levels, if the funds want to sell, they are going to sell.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 484^0    0^0                   488^0    482^4    6626

ZCH9                502^0    -1^0                  506^4    501^4    1137

ZCK9                514^6    -0^2                  517^6    514^6    144

ZCN9                525^4    -0^2                  530^0    524^4    663

Early Opening Calls: off 1-2 cents

Top News

**USDA Corn 08/09 Export Sales Net: 568,500 mt; 09/10 Net: NONE mt; expected
400-600k mt

**Stats Canada Barley Output Estimate:  11.2 mln mt; expected 11.1; July Rpt
10.375

**Stats Canada Oats Output Estimate:  4.32 mln mt; expected 4.1; July Rpt
4.061

-- 2008 Corn crop pegged at 12.026 mln bu. by FC Stone vs. their prior
estimate of 12.159 bln bu & compares to the USDA forecast of 12.072 bln bu.

-- USDA Sec says the agency is watching the financial crisis & its possible
implications to the US farm industry, but he did say the farm sector
indicators still remain strong going into the recent time period.

-- Consolidation is needed in ethanol industry, says CEO of Pacific Ethanol,
further he says his company has held talks with a potential buyer, acc. to
headlines from Reuters. The chief exec also says not enough growth on US
supply side for expected demand in 2010

-- Dalian Exchange is on public holiday from Sept 29 through Oct 3rd

-- Liffe Nov corn futures were off 1.25 euro at 138.75 euros/mt.

-- Globex Corn Vol: 161,103; Pit Vol.: 21,186; Open Interest change: - 2,480

-- Weather: 6-10 Day Forecast:  Normal to Above Temps.  Normal to Above
Precip. The Corn Belt looks dry today into Saturday. Sunday could see some
showers move west to east. Temps look to warm some early next week.

-- Outside markets: Energy Complex -2.45 at $96.08; Gold & Silver: -28.2 at
$860.1 & -0.848 at $11.910; US $ is trading slightly lower vs. Yen & is
slightly better vs. Euro.

Cash Markets

-- CIF Corn  steady  off 1. Sept. +43 to +45, Oct. +43 to +45, Nov. +46 to
+47, Dec. +48 to +51, Jan. +37 to +40 Feb. +37 to +40, Mar. +37 to +40

TREND:

Corn should have problems makign it through the 5.00 level. Try to sell
calls against a trade to that level.

Wheat will continue to chop around. Another leg down is not only possible to
probable but stability around the 6.50 to 6.40 level could provide a little
support for a while.



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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