Linn Group Morning Corn Comment

CHICAGO - Oct 17/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slight lower on Thursday but well off the lows and
actually traded higher on the day in the last 15-30 min of the trading
session.  Traders/analysts said that we probably were seeing profit taking
after the sell off this week and the new lows that were made in corn.  The
outside markets helped push the grains lower and we are seeing demand
destruction across the world as the global financial crisis is reducing
demand for all commodities.  We continue to see fund liquidation as funds
are seeing big redemptions and/or traders are being handcuffed by the lack
of liquidity.  The grains are really starting to look cheap to the outside
world and we should start to see some bigger exports or the grain markets
are really in trouble.  We also continue to hear from farmers about better
than expected yields as they are getting into corn harvest.  The weather
remains a non-factor as the cold weather poses little problems and the rain
remains light across the Midwest.  Actually, some areas received the first
hard frost/freeze of the season and could actually help dry down corn.  When
talking to different elevators across the Midwest, we continue to hear about
the lack of farmer selling.  The volume on Thursday was up a little at
225,000 contracts and funds were net sellers of 5,000+ contracts.

Overnight, the corn market rallied on the back of the outside markets and
further profit taking.  After the grains closed yesterday, the crude oil
rallied about $2.50 and the Dow went from about unchanged to closing up 400
points.  Both of these were positive to the grain markets, but the markets
were closed, so that is part of the reason we were higher overnight.  Export
sales this morning were strong at 975,200 tones, but this pales in
comparison to last years sales of 1.8 mil.  As I mentioned earlier, we
should see some better export sales with the lower prices, but when you
compare to last year, you can see how much demand has been reduced.  As we
have been talking about, the reduction in demand is bigger than the size of
the US crop.  The corn market is probably oversold and due a bounce, but you
can't ignore the outside markets and/or the funds.  If we continue to see
fund liquidation, it doesn't matter what the fundamentals are telling us.
If the US crop gets bigger the farther along in harvest we get and we don't
see any farmer selling, we are going to go lower down the road.  The corn
market should open higher today, but watch the outside markets and I still
think you want to sell rally's and if you are short, there isn't any reason
to take profits, just remember that you will want to resell it on rally's
and/or lower if the bottoms doesn't hold.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 389^2    4^6                   397^0    387^0    5839

ZCH9                406^0    4^4                   414^0    404^4    706

ZCK9                421^0    8^4                   423^6    419^0    655

ZCN9                427^0    3^6                   435^0    427^0    198

Early Opening Calls: 2-4 cents better

Top News

-- Dalian May corn futures were 34 Yuan better at 1,667 Yuan/mt.

-- Liffe Nov corn futures were 3.50 euro better at 131 euros/mt.

-- Globex Corn Vol: 202,707; Pit Vol.: 13,072; Open Interest change: - 1,311

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip. Today will see some light showers favoring the western areas of the
Corn Belt. Saturday looks dry. Sunday will see some light showers favoring
the north. Monday and Tuesday dry. Temps near normal.

-- Outside markets: Energy Complex +0.87 at $70.72; Gold & Silver: -14.2 at
$790.3 & -0.170 at $9.457; US $ is trading better vs. Euro & steady vs. Yen.

Cash Markets

-- CIF Corn steady off 2. Oct. +55 to +58, Nov. +54 to +57, Dec. +57 to +59,
Jan. +43 to +48 Feb. +44 to +47, Mar. +44 to +47, Apr. +40 to +43

TREND:

The corn market settled well off their lows and in doing so has given us a
spike low. Look for breaks to be supported as we should see a bit of a
rally.

The wheat market was able to settle above the 5.50 level. This is an
important level for wheat. A close below this level would set this market up
for a further decline, possibly as low as 5.00. For now expect to see this
market chop around between 5.45 and 5.70. Wheat should be a follower to corn
and beans.



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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