Linn Group Morning Corn Comment

CHICAGO - Nov 6/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off on Wednesday as the December contract was down over
5% as we saw all commodities sell off.  The December contract was down over
22 cents as the selling started early and the market continued lower all day
before a final sell off late in the trading session.  The outside markets
could be partly to blame as the crude oil market was down over $5, but the
US$ was lower most of the day actually closing lower which is usually
positive for the grain markets.  The big rumor yesterday was there was going
to be feed grain imported into So. Carolina to compete with local feed, but
different traders couldn’t make the math work for it to happen.  This has
been talked about and even if it did happen, it won’t make a big difference,
but psychologically, it is negative.  Traders also pointed to the technicals
as part of the reason for the sell off as corn made new day session highs
and was due a correction.  The weather starts to get a little tough to
harvest corn as rains and cold weather cover most of the Midwest for the
next 6-10 days with parts of North and South Dakota getting snow and blowing
conditions.  There was some talk of new fund buying in the grain markets,
but we didn’t see anything yesterday.  The volume was about average at
230,000 contracts and funds were net sellers of 5,000+ contracts.

Overnight, corn traded mostly lower and closed down about 4 cents, but off
the lows and the soybean market actually closed higher overnight.  Very
little news to go off overnight as the market continued to look at the
outside markets for direction and with the crude oil lower and the US$
higher, grains went lower.  Weekly export sales were a little disappointing,
but it should be a big surprise because of the lack of demand across the
world.  See details below.  The reduction in demand is the most important
thing going on right now and as that continues, price will go lower.  Corn
is still in a range trade, but you can’t ignore what is happening across the
world.  The corn market will probably be under pressure from the beginning
today and we may see traders try and push this market lower today and test
the lows.  The US$ and crude has been bouncing around since the grains
closed, we are at app. the same levels as when the grains closed at 6am CST.
The corn market will be called in-line with where it closed this morning and
then look for direction.  I still think we are in a range trade, especially
with the USDA report on Monday, but with the lack of volume, anything can
happen.  The Goldman Roll starts on Friday so we will see an increase in
volume, but it is probably mostly spreading from Dec08 to Dec09.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 387^0    -3^2                  391^4    383^6    5669

ZCH9                403^4    -4^4                  409^2    401^4    770

ZCK9                415^0    -5^2                  421^2    415^0    26

ZCN9                427^4    -4^4                  433^0    426^0    216

Early Opening Calls: off 3-5 cents

Top News

**USDA Corn 08/09 Export Sales Net: 471,300 mt; 09/10 Net: NONE mt; expected
450-650k mt

-- Brazilian gov't CONAB forecast the upcoming 08/09 Corn crop in a range of
54.3 to 55.2 mln mt, down from their prior estimate of 55 to 56 mln mt

-- Head of France's grain institute says in spite of slow harvest due to
rains, the French corn crop should be at the 15.2 mln mt level that's above
the official Ag Ministry forecast of 14.97 mln mt

-- South Africa's final corn crop estimate for the 2008/09 marketing year is
set at 12.0 million tons, 73.9 percent more than the 6.9 million tons of the
previous season. South Africa will have 2.1 million tons of corn available
for exports in the 2008/09 marketing year. So far South Africa has already
exported 902,112 tons of corn, mainly white corn. The forecast for the
2009/10 marketing year corn crop under normal climatic conditions is 9.1
million tons on 2.6 million hectares, acc. to USDA ag attaché.

-- Eurostats report suggests farmers in the EU will produce 306.7 mln mt of
grains & cereals by the end of 2008 harvest, that's up 46.9 mln mt from the
prior year.  The agency also estimates Corn output in the EU at 59.1 mln mt
up 10.7 mln mt from the prior year.  Wheat production is expected at 138.7
mln mt up 26.8 mln mt over the prior season.

-- Pending Tender: A week from today, on Nov 12th, Taiwan feed millers group
plans to tender for 84,000 mt of US/S American Corn for delivery in late
Dec/ early Jan.

-- Pending Tender: 24,000 mt of US or Euro Corn and 42,000 mt of Corn
products sought in tender by Israeli group, bidding to close on Wed. Nov 5th

-- May Dalian corn futures were off 12 Yuan at 1,620 Yuan/mt.($1 = 6.83
Yuan)

-- Liffe Jan corn futures were off 2.50 euro at 133 euros/mt.

-- Globex Corn Vol: 199,849; Pit Vol.: 27,744; Open Interest change: - 4,396

-- Weather: 6-10 Day Forecast: Below Normal Temps. Above Normal Precip.
Showers and thunderstorms move across the Corn Belt today and Friday. Some
light showers with some snow flurries in the northern areas Saturday and
Sunday. Temps normal to below.

-- Outside markets: Energy Complex -0.84 at $64.46; Gold & Silver: +13.2 at
$754.8 & +0.190 at $10.668; US $ is trading higher vs. Euro & is slightly
lower vs. Yen.

Cash Markets

-- CIF Corn steady off 3 . Nov. +46 to +47, LH Nov. +46 to +48, Dec. +48 to
+51, Jan. +39 to +43 Feb. +39 to +43, Mar. +39 to +43, Apr. +37 to +41

TREND:

Wow---only a fade trade. No trend to follow here? Hard to say what we do
tomorrow but would think this break runs out of selling quickly.

Encouraged traders to come away from the short side of all the markets
today. This means some may have gone home long tonight with the short side
of trades covered?

Not quite divorced from the outside influence yet and those look pretty
negative going home tonight.

Trade is still not quite right with counter party risk still a major
concern. This is affecting domestic trade with Vera sun putting out a letter
today outlining what the bankruptcy judge will allow on corn contracts. It
is not pretty for some. There are two other ethanol companies that have
equal problems in buying from farmers. In the export trade LC’s are still
not that readily available and ocean freight shows that. The rumors of trade
of non-US feed stuff into Wilmington all the more believable with this
problem---freight commitments that have to be used and a cash US buyer that
has less of a creditability problem than other destinations?



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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