Linn Group Morning Corn Comment

CHICAGO - Oct 16/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off hard on Wednesday as the global financial crisis
bled over to the grain markets.  The December contract closed down 23 cents
as the grain markets followed the outside markets lower.  The crude oil
market was down over $4 and the US$ was up over 70 pts which pressured the
grain markets because of the lack of any fundamental news.  Some
traders/analysts would argue that the fundamental news doesn't make a
difference right now as all markets are trading more macro news than any
fundamental news.  The grain markets will continue to trade off the outside
markets until the financials can find some stability and/or a trading range.
Traders keep trying to find a bottom and when that bottom gets taken out, we
have liquidation and fresh selling.  The weather remains a non-factor for
the most part because of all the other action, but parts of the Midwest
continue to see rain which is delaying harvest.  The volume was on the light
side at only 192,000 contracts and funds were sellers of 7,000+.

Overnight, the corn market continued lower, but did recover toward the close
this morning to only close slightly lower after being down almost 10 cents
earlier in the night session.  Nothing has changed in the corn market as it
continues to be affected by the outside markets as much as the fundamental
data.  We continue to hear about good corn yields as farmers are finally
getting into corn harvest as they finish up soybeans.  The corn market is a
follower right now as some traders want to talk about corn putting in a
harvest low, but the problem with that argument is the lack of farmer
selling.  We are hearing from different parts of the country that farmers
are delivering contracts for fall delivery, but they aren't selling anything
extra.  Any extra corn is being stored on the farm or DP at the elevator.
We keep hearing the statement, "prices have to go higher" and until you stop
hearing that and you see farmer selling the grain markets will continue to
go lower.  This lack of farmer selling will have to come eventually and
could possibly set the market up for selling later this year and into the
winter when farmers need money.  The corn market should open lower today and
then look for direction.  We recovered off of new lows last night, so be
careful if the market gets back down to those levels as there is probably
another round of sell stops.  Weekly export sales delayed until tomorrow
because of the holiday on Monday.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 387^0    -1^0                  387^6    378^6    12108

ZCH9                402^2    -3^2                  405^0    396^4    1704

ZCK9                413^2    -3^6                  416^2    409^0    74

ZCN9                427^0    -0^6                  427^4    418^6    132

Early Opening Calls: off 2-4 cents

Top News

-- Dalian may corn futures were off 2 Yuan at 1,633 Yuan/mt.

-- Liffe Nov corn futures were off 0.50 euro at 127 euros/mt.

-- Globex Corn Vol: 171,749; Pit Vol.: 14,513; Open Interest change: -
12,410

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. The Corn Belt will see showers ending in the east and south later
today. Friday into Monday looks dry. Temps normal to above for the period.

-- Outside markets: Energy Complex -0.27 at $74.27; Gold & Silver: -1.1 at
$837.5 & +0.035 at $10.226; US $ is trading slightly better vs. Euro & Yen.

Cash Markets

-- CIF Corn steady up 2 . Oct. +56 to +60, Nov. +55 to +56, Dec. +56 to +57,
Jan. +45 to +48 Feb. +46 to +48, Mar. +46 to +48, Apr. +42 to +43

TREND:

Credit market skids greased but there remains the underlying concern that a
poor economic outlook prevails.

The Ag sector is facing a real challenge to fill short term commitments as
harvest continues to lag normal timings. Farmers will continue to find
places to store grain and not sell the current levels. This may serve to
force current weakness to remain around as that selling will take place
later instead of now? End users are finding supplies hard to come by and
this is giving a false sense of tightness. We have plenty of crop around.

Harvest is not only delayed but coming in wet for both corn and beans. May
affect how the crop stores. It is certainly raising the cost of handling the
crop. One crusher explained the higher cost of beans with moisture running
at least 1 to 1.5 pct above last year. Moisture at 12.5 vs. 11 pct last year
will lower the value of those beans by 15 to 18 cents.

Corn yields continue to be variable but some reports of phenomenal
performance of hybrid seed given he growing conditions.



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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