Linn Group Morning Corn Comment

CHICAGO - Oct 7/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The commodity markets took it on the chin again on Monday as we continued to
see liquidation across all commodity markets.  I know it sounds like a
broken record, but the grain markets don't care about the fundamentals and
these markets are being controlled by the funds, the financial crisis, and
outside markets.  The corn market closed limit down on Monday and
synthetically, the corn was down another 8-10 cents.  We are continuing to
see fund liquidation and this market has "scared" some traders out of the
market because these are "scary" times and nobody understands how low the
market can go.  Trading the grain markets based on the outside markets has
been going on this whole year, but it was easy to buy when the crude was
going higher and the US$ was going lower, but now that it is reversing,
traders/farmers are nervous because nobody likes to trade down markets.  The
trading limits will be expanded to day to 45 cents.  The market is largely
ignoring any fundamental data as the weekend rains and the forecast for
rains this week would in a normal year be considered bullish because it is
delaying an already late harvest, but the market just doesn't car.  The
volume was at app. 250,000 contracts, which was about average and funds were
big sellers of app. 15,000+ contracts.  Crop progress was released after the
close, details below, but this will go largely ignored by the market.

Overnight, the corn market opened lower in-line with the synthetics from the
close yesterday, but the market did recover to close slightly higher.  The
corn market was pretty quiet overnight considering the sell off we saw
yesterday, but remember, corn was down over 16% last week and then another
40 cents yesterday.  That is a big drop and this market is probably due a
bounce, but with the grain markets moving inline with the outside markets,
nobody knows.  The grain markets are due a break from all the selling, but
can these market hold a rally?  That is the big question and right now, the
reduction demand is probably too big of a problem to overcome and push
prices higher.  There will probably be a battle for corn and bean acres at
some point in the next 8-9 months, but maybe it doesn't have happen as early
this year as the last couple of years.  Maybe we have a more typical harvest
this year where the markets break into harvest and then rally instead of
rallying into harvest?  The outside markets are pointing to higher grain
markets today, but I would be worried about the grain markets being able to
hold rally's.  We do have the USDA report on Friday and we will probably see
some short covering into this report because of the huge break the last 7-10
days.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 425^0    1^0                   427^6    416^4    12387

ZCH9                442^0    -0^4                  443^0    433^0    2683

ZCK9                453^6    -1^0                  454^6    444^6    217

ZCN9                464^0    -2^0                  466^0    455^0    345

Early Opening Calls: 2-4 cents better

Top News

-- USDA weekly progress report showed corn Mature 73%, that's behind last
year's pace of 95% & the 5 yr avg of 89%.

-- USDA weekly progress report showed corn Harvested 14%, that's behind last
year's pace of 39% & the 5 yr avg of 30%.

-- Latest weekly Corn conditions were slightly changed: vp-poor category 13%
vs. prior week's 13%, fair category 26% vs. 26% last week & combined
good-exc categories were 61% vs. 61% last week.

-- Monday USDA Weekly Corn Inspections: 33.528 mln bu; expected 35.5 mln bu

-- Chicago corn, soybeans, some months of soybean meal and soybean oil
locked limit down Monday, Tuesday's session will see expanded limits in
those contracts. Corn limits will be 45 cents, bean limits will be 1.05,
meal limits will be 30.00 and oil limits will be 350 points.

-- Argentine grain ports were idle Monday as farmers vow to continue their
strike until Wednesday this week.

-- Some areas like Memphis & Cairo have seen barge rates have hit tariff
rates above 2005 Katrina levels, while other areas have equaled their record
highs.  Traders say a percentage of barges are being tied up as floating
temporary storage situations at a time when the Midwest harvest is beginning
helping drive prices higher.

-- May corn futures on the Dalian Exchange fell 24 Yuan, settling at 1,651
Yuan/mt

-- Liffe Nov corn futures were 1 euro better at 130 euros/mt.

-- Globex Corn Vol: 226,204; Pit Vol.: 14,492; Open Interest change: + 270

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt will see showers moving west to east today and
Wednesday. Mostly dry Thursday into Saturday. Showers in the west Sunday.
Temps normal to above.

-- Outside markets: Energy Complex +3.51 at $91.31; Gold & Silver: +19.7 at
$882.3 & +0.448 at $11.697; US $ is trading better vs. Yen & Euro.

Cash Markets

-- CIF Corn steady up 3. Oct. +53 to +??, Nov. +52 to +??, Dec. +53 to +58,
Jan. +40 to +45 Feb. +40 to +45, Mar. +40 to +45

TREND:

The route continues with sellers today encompassing all segments of the
market. Have to say that we continue to see the outside influences so much
more important than any fundamental analysis of crops. The ocean freight
continued to weaken more than I had realized last week and has pushed a lot
of any new export interest to the gulf rather than the PNW.

The lack of farmer selling also led to firming basis in reaction to the
lower futures. Spreads tended to gain in all markets today but the gains
were masked by the limit closes in futures.

Expanded limits tomorrow in corn, beans, meal and oil---if some one wants to
press? I would be remiss if I did not warn about how negative the charts
look if we do get additional selling tomorrow?

Demand should get a kick start with the lower futures and the lower ocean
freight but the credit markets and the poor economic outlook has many buyers
taking a wait and see attitude. Egypt in overnight and could be a signal of
more interest developing?

Not a willing seller at these levels and users should note that we are
probably very near a bottom of sorts-if only for a short time? Very oversold
and potentially seeing a short covering rally at some point here. Sellers
will be hard to find if we leave these closes with a higher start in the AM.



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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