Linn Group Morning Corn Comment

CHICAGO - Oct 13/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The grain markets closed limit down on Friday as the market got the bearish
crop report it was looking for and the outside markets pushed the commodity
markets lower.  The December contract traded very little on the opening and
then stayed limit down the rest of the day.  Synthetically, the corn market
was about another 10-15 cents lower on the close.  The USDA released its
crop report which raised the yield estimate pushing the futures markets
lower and setting up the scenario of an increase in the yield estimate in
November and the final numbers in January.  The USDA increased the yield
estimate from 152.3 to 154 bu per acre and history tells us that when we see
an increase in the yield estimate in the October report, we get increases in
the November and January reports.  The grain markets would probably have
been much lower regardless of the USDA report because of crude being $7-$9
lower and the US$ up almost 200pts.  The outside markets did recover off the
lows significantly after the grains closed on Friday and as we have seen the
last couple of weeks, the outside markets have had as big an influence on
the grains as anything.  The volume was obviously muted with the limit down
move and funds were estimated to have sold 8,000+ contracts.

Overnight, the grain markets opened lower which was expected with the limit
down closes on Friday, but the markets did recover as the outside markets
were supportive to the grain markets.  The corn market closed up about 6
cents which was about 15-16 cents off the lows as the crude oil market was
up about $4.50 and the US$ was down about 180 pts.  The corn market is
probably into a range trade now that we have the USDA report behind us and
the outside markets should find some support unless we have another crisis
pop up.  We have expanded limits today, but doubtful if those come into play
today.  The outside markets are supportive today and the grains should get a
recovery, at least, on the opening, but the fundamentals for grains/corn are
negative and nothing looks to change.  The world demand for grains looks to
be lower than last year as the global financial crisis is reducing the
demand for commodities.  The corn market will be called 3-5 higher this
morning and I would expect any attempt to rally the corn market will be met
with active selling.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 414^4    6^2                   417^4    398^2    11816

ZCH9                432^0    6^2                   435^4    415^6    1693

ZCK9                444^6    7^2                   444^6    427^4    74

ZCN9                455^4    7^2                   455^4    438^2    147

Early Opening Calls: 5-7 cents better

Top News

-- The French government's Oct estimate of the 2008 Corn crop was raised
slightly to 14.97 mln mt from 14.67 mln mt

-- Corn planting in Argentina is estimated at 29.8% complete that compares
to last year's 33.2% complete, acc. to Buenos Aires exchange report.

-- Grains harvest in Russia is leading last year's pace by 25 mln mt, acc.
to Russia's Ag Ministry.  They estimate 110.5 mln mt of grain on a bunker
weight basis has been harvested through Monday.  Harvest is reportedly 96%
complete.

-- Head of Goldman Sach's commodity market research Monday reversed its near
term outlook for global commodity markets, suggesting demand will be
impacted more than originally anticipated.

-- USDA guarantees of credit for financing US exports by foreign imports
jumps as bank liquidity & credit concerns plague broader market.  So far
foreign importers of US ag goods have take advantage of $1.9 bln in credit
guarantees.

-- May Corn futures on China's Dalian Exchange settled 21 Yuan higher at
1,641 Yuan/mt, trading over 1.23 mln contracts.

-- Liffe Nov corn futures were 3.75 euro better at 129.75 euros/mt.

-- Globex Corn Vol: 59,744; Pit Vol.: 5,874; Open Interest change: - 4,676

-- Weather: 6-10 Day Forecast: Normal Temps. Normal to Above Precip. Showers
move from west to east today into Wednesday. Thursday looks dry. Friday may
see some light showers favoring the east. Temps normal to above.

-- Outside markets: Energy Complex +4.22 at $81.92; Gold & Silver: -1.2 at
$852.0 & -0.060 at $10.545; US $ is trading better vs. Yen & Euro.

Cash Markets

-- CIF Corn up 1 to 3. Oct. +55 to +60, Nov. +54 to +57, Dec. +55 to +58,
Jan. +44 to +47 Feb. +44 to +47, Mar. +44 to +47, Apr. +39 to +42

TREND:

There is no doubt the market is very oversold---yes reacting Fri to a
negative crop report taking away some of the tight grain situation that is
feared in corn and beans for next year as well as this year. The banking
crisis and the general move to take what money is left back home to put in
the mattress is well documented. Funds have faced margin calls and
tightening credit so that positions have been shaved sharply. Continued
heavy redemptions on index funds have left them reduced sharply. Positions
have not been curtailed as much as could have been expected---but is because
at lower price levels, reduced total balances can carry larger net
positions.

Not able to close the gap left early in the week adds to the negative feel
of this market. Still very oversold but not as bad as early in the week. The
sideways action has corrected that some this week. Long term support at
$4.35 should give this market some stability. The gap remains serious
overhead short term with long term resistance at the 5.04 break out to the
down side. New crop carries should start to tighten as farmers thumb their
collective noses at current reduced prices. This is bullish basis and
eventually the new crop carry spreads . This is the lowest risk bullish
position in corn . Z/N is only 3 cents from full carry at the settlements.



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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