Linn Group Morning Corn Comment

CHICAGO - Oct 9/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market recovered a little on Wednesday as we finally had some short
covering and the some cash pricing after the huge break we have seen the
last 9 days where the December corn lost almost $1.50.  The December
contract closed up 10 ½, the first close higher in 9 days.  The corn market
has been oversold, but the market didn’t have anybody that was willing to
step out and buy the market because we continued to see fund and spec
selling.  The December contract tried to test the $4 level and didn’t get
there, so with the USDA crop report approaching tomorrow morning, traders
were content to take profits and sit to the sidelines.  The December
contract has fallen almost $4 from the highs and farmers may have now put
their foot down and are willing to hold grain instead of selling at these
prices.  The outside markets were a mixed bag on Wednesday, but not overly
negative, so that probably helped the grain rally.  The rally should be
contained unless we get an unexpected jolt in export sales today or if there
is a surprise in the USDA report tomorrow morning.  The weather remains a
non-factor as some rains across the Midwest are delaying harvest, but
nothing substantial.  The volume was down a little yesterday at about
200,000 contracts and funds were net buyers of 5,000+ contracts.

Overnight, corn continued to move higher as we are seeing more short
covering in front of the USDA report after the huge break we have seen the
last 10 days.  The December contract closed up another 10 cents overnight on
a relatively calm night in the outside markets and in the financial sector.
Weekly export sales released this morning we strong, maybe a little bit of a
surprise, but lately, the fundamental data has meant little to this market.
With the quiet outside markets and a relatively quiet financial sector
overnight, maybe the grains fundamentals don’t get ignored today?  The
bottom line is that corn is probably oversold and due a bounce, but how big
a bounce do we get and is a bounce in the corn market met with selling
pressure is the real questions.  I would expect to see corn open strong
in-line with the overnight session and then we will see if we continue to
get short covering or if we see 2 sided trade today.  There is going to be
profit taking today with the USDA report tomorrow and the majority of
traders are short the corn market.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 438^6    11^2                  439^4    425^0    8178

ZCH9                454^6    10^6                  455^6    442^0    625

ZCK9                466^2    10^4                  466^2    454^6    148

ZCN9                476^4    10^4                  477^2    465^0    297

Early Opening Calls: 8-10 cents better

Top News

**USDA Corn 08/09 Export Sales Net: 957,900 mt; 09/10 Net: NONE mt; expected
450-700k mt

**The Linn Group forecasts 2008 US Corn Production at 12.063 billion
bushels, with an average yield of 152.1 bpa

**Linn Group estimates Iowa corn yield at 174 bpa, soybean yield at 48 bpa

**Linn Group estimates Illinois corn yield at 175 bpa, soybean yield at 44
bpa

**Linn Group estimates Nebraska corn yield at 160.5 bpa, soybean yield at 50
bpa

**Linn Group estimates Minnesota corn yield at 163 bpa, soybean yield at 41
bpa

**Linn Group estimates Indiana corn yield at 158 bpa, soybean yield at 44
bpa

-- Analysts estimate Friday's USDA 2008/09 Corn Ending Stocks at 1.13 bln
bu, that compares to the USDA's Sept estimate of 1.018 bln bu.

-- Russia's ag minister announced record overall grain yields this season,
saying 2.2 mt/ha have been achieved & now expects the country's harvest
total over 100 mln mt, up from the previous expectation of 95-100 mln mt

-- 50,000 mt of Feed grade Barley are sought in a Thursday tender floated by
Tunisia's state grain agency.

-- Iran's state news outlet reports the country's oil minister says OPEC
will likely hold a meeting in middle of November to review market conditions

-- May Dalian Corn futures were 6 Yuan higher in overnight trade, settling
at 1,669 Yuan/mt, all other contract months ended higher

-- Globex Corn Vol: 169,434; Pit Vol.: 21,813; Open Interest change: - 6,929

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. The Corn Belt looks dry today and Friday. Saturday and Sunday will
see a chance of light showers favoring the north. Showers move west to east
Monday – Tuesday. Temps normal to above.

-- Outside markets: Energy Complex -0.18 at $88.77; Gold & Silver: -16.5 at
$886.6 & -0.097 at $11.688; US $ is trading slightly lower vs. Euro & is
trading better vs. Yen.

Cash Markets

-- CIF Corn steady off 2. Oct. +57 to +58, Nov. +56 to +58, Dec. +56 to +58,
Jan. +43 to +46 Feb. +43 to +46, Mar. +43 to +46

TREND:

The reversals overnight and the choppy trade was not easy to handle for
many. The financial crisis has spread to the entire world and credit remains
a major stumbling block in conducting business on a daily basis. There is a
crop report on Fri AM so some short covering is not unexpected. The outside
day up in CZ comes on a very oversold condition so we could bounce some
here. The immediate resistance will be in the gap at 4.54 and it could kill
any rally. The long term resistance at 5.00 will be a ceiling for a while.
The long term chart shows the support at 4.35 and the gap on the long term
charts at 4.25. We pressured both but the reversal this week off that major
long term support could prove important given time to test and confirm the
action.



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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