Linn Group Morning Corn Comment

CHICAGO - Oct 6/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed about unchanged on Friday as we had a sell off in the
grain markets the last 15 min of the day erasing the higher moves in corn.
The corn market traded higher most of the day as all the markets awaited the
vote on the Bail Out package and when it came, all markets seemed to sell
off on the old buy the rumor, sell the fact.  The grain markets could start
to go back to trading the fundamentals, but with the reduction in global
demand and concerns about a global financial meltdown, the fundamentals may
not mean very much.  The fundamentals in grains are negative and have been
negative and you have to ask yourself, what is going to change.  The USDA
will release the October crop report numbers on Friday and there could be
some surprises, but so far, the grain markets haven't cared about what the
USDA says.  The demand for grain has decreased both domestically and
internationally and that will lead prices lower as much as the funds.  I was
wrong on the insurance coverage as most only have coverage on so much
downside risk, then they don't have coverage again.  3rd party risk is also
very real for producers as some of the elevators/ethanol plants you sold
your grain to at lofted levels might feel it is easier to declare bankruptcy
than to pay you what the contract says.  This is a very real worry.

Overnight, the corn market sold off right from the beginning and only went
lower as the night went on before the December closed down 23 cents.  There
was no new fundamental news, it was more worry about global markets and the
affect a global recession would have on commodity prices.  The market
overnight, had a deeper break than most thought and maybe that is what the
market needs, to convince everybody that the market can keep going lower.  A
lot of traders were trying to pick bottoms last week and they got burned.
We continue to see fund liquidation and you can't look for positive
fundamentals to help the grain markets.  The market just doesn't care about
positive fundamental data right now.  The corn market should open 25-30
lower this morning and then look to see if it locks limit down.  The outside
markets are negative this morning with crude oil down almost $4 and the US$
up over 100 pts.  Be careful here trying to pick bottoms and the grain
markets can probably go lower than you expect, just like they went higher
than you expected this winter.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 431^0    -23^0                 448^0    427^6    12723

ZCH9                449^4    -23^0                 466^4    446^6    1909

ZCK9                461^4    -23^2                 480^0    460^0    199

ZCN9                472^4    -23^4                 491^0    470^0    458

Early Opening Calls: off 25-30 cents

Top News

-- On Friday Informa estimated US Corn yield at 154.1 bpa, production at
12.219 bil bu - down 110 mil bu from last month's estimates

-- Argentine farmers continue their strike through Wednesday this week,
halting grain & livestock sales.

-- Pending Tender: Tuesday, Oct 7th is deadline for 24,000 mt Corn tender
floated by Israeli group.  The group is also seeking 42,000 mt of Corn
products & Soymeal on the same date

-- Jan Corn futures on the Dalian Exchange Monday fell 88 Yuan to 1,675
Yuan/mt

-- Liffe Jan corn futures were off 6.50 euros at 128 euro/mt.

-- Globex Corn Vol: 155,932; Pit Vol.: 20,205; Open Interest change: - 7,094

-- Weather: 6-10 Day Forecast: Normal to Above Temps East, Normal to Below
West. Normal to Above Precip. The Corn Belt will see some showers favoring
the north today. Tuesday into Wednesday showers move west to east. Another
round of showers show up near the weekend. Temps normal to above.

-- Outside markets: Energy Complex -4.11 at $89.77; Gold & Silver: +31.3 at
$858.3 & -0.022 at $11.321; US $ is trading better vs. Euro & is slightly
lower vs. Yen.

Cash Markets

-- CIF Corn steady up 3. Oct. +50 to +52, Nov. +52 to +54, Dec. +53 to +56,
Jan. +40 to +42 Feb. +40 to +42, Mar. +40 to +42

TREND:

It has been a tough week for anyone wanting to pick bottoms. The uncertainty
of the credit mess and the strong dollar has been instrumental in weaker
markets. Trade has come to a near standstill as banking tightness got in the
way There was also a renewed concern about counter party risk in all the
market. Farmers were concerned about corn sales made at $2 to 3 above
current values to ethanol plants. Feeders were concerned about buying
discounted DDG values out for any extended time for fear those supplies may
not be available with many of those plants experiencing financing/operations
problems? It is hopeful that the stability in the ocean freight market this
week signals a renewed interest?

Corn broke 90 cents this week gaining momentum when we took out the
reactionary low made in Aug. Down side counts get scary for farmers that do
not have enough sold. But the support on the long term charts start to
surface at 4.35. There is also a gap on the weekly chart where trade gapped
above this breakout level which lends credibility to this support level. We
could get through it on a bad day but look for 4.35 to 4.25 to be magic
support.



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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