Linn Group Morning Corn Comment

CHICAGO - Nov 19/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market drifted lower on Tuesday on a very quiet day across most
markets.  The December contract closed down 5 ¾ near the lows, but the
market seemed to just drift lower on the lack of any news and quiet outside
markets.  The corn market is officially in a trading range as there really
has not been any attempt to test the lows from last week and the slow down
of US and world economies are preventing any rally from gaining traction.
The world markets have seemed to stabilize right now and most
traders/analysts are waiting to see if there is another shoe to drop or if
we have really stabilized.  The sideways trade we have seen the last month
or so has gotten narrower and some traders/analysts feel the market has put
in a harvest low and that is why we are seeing short covering and some
rallies.  The slow harvest is also offering some support as there is sill
almost 25% of the US corn to harvest and it is the 20th of November.  The
problem is that there is no demand for corn right now, so this lack of
harvest progress is going largely ignored.  If this was most years, the corn
market should have rallied a lot on this lack of harvest progress.  The
volume was pretty weak, with most of the volume coming from spreads and not
flat price and funds were net sellers of 5,000+ contracts.

Overnight, the corn market closed slightly higher on a very quiet night as
the trading range was only 4 cents.  The corn market has been in a trading
range this fall and that range is getting tighter, suggesting we could see a
breakout to either the upside or downside.  We continue to get negative news
on the corn market and it can’t break.  Harvest is way behind and there is
talk of yield reduction and a reduction in quality and the market can’t
rally.  What does this tell us?  The corn market has been in a range trade
and different traders/analysts will tell you this range trade is a trend and
we are do trend change.  The lack of volume and the lack of fund activity is
probably a valid reason of why the corn market can’t break out of this
trading range.  With the turmoil in the financial markets, the money has
dried up in the commodity markets, but there is speculation that money is
going to come back in, the big question is if it is going to sell or sell
the grain markets.  The corn market will open about unchanged today and then
look for direction, but it could be another quiet day.  Friday is December
option expiration so that could start to have some affect on the markets
because December is one of the biggest months for option expiration.  The
US$ has broke down from where it was when the grains closed this morning, so
that could lend some support to the markets.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 381^4    1^4                   383^0    379^0    2322

ZCH9                398^0    1^4                   399^4    395^0    1339

ZCK9                409^2    1^4                   409^4    406^6    29

ZCN9                420^0    1^0                   422^0    417^6    157

Early Opening Calls: 3-4 cents better

Top News

-- 21,000 mt of US Corn was bought on behalf of N Korea under the USDA's CCC
donation program.

-- JP Morgan 2009 commodity price outlook says ag commodities will likely
outperform oil & other raw industrial commodities.

-- While officials from USDA wouldn't comment on amount of planned broiler
chicken purchases under federal gov't food assistance schemes, the top
official at the Nat'l Chicken Council expects at least 50 mln lbs to be
bought by the gov't

-- Ethanol analyst at FO Licht says he expects Brazil sugar base ethanol
production to rise in the 09/10 crop year to 23.9 bln L vs. the prior year's
20.3 bln L.  They also note as credit concerns hit & lower prices of ethanol
impact margins, facility construction has ground to a halt & supply of cane
will outstrip crushing capacity

-- Head of Bank of Canada said Wednesday that a weaker C$ will help limit
declines in exports.

-- May corn futures on the Dalian Exchange fell 5 Yuan to 1,592 Yuan/mt

-- Liffe Jan corn futures were off 1 euro at 123 euros/mt.

-- Globex Corn Vol: 153,019; Pit Vol.: 23,980; Open Interest change: + 2,377

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Below Normal Precip.
The Corn Belt looks dry today into Saturday. Sunday may see some light
showers. Temps normal to below.

-- Outside markets: Energy Complex -0.74 at $53.65; Gold & Silver: -4.5 at
$735.8 & -0.151 at $9.396; US $ is trading slightly better vs. Yen & is off
slightly vs. Euro.

Cash Markets

-- CIF Corn off 2 to 5. LH Nov. +?? to +32, Dec. +35 to +38, Jan. +34 to +35
Feb. +34 to +35, Mar. +34 to +35, Apr. +34

TREND:

Willing to press wheat on rallies and that worked today. Not sure why it
rallied back while corn and beans were soft except that there seems to be a
toggle at work with inter-market spreaders at work. Still see this market
testing $4.60 to 4.50.

Corn is still stuck in a range. Do not sell corn to be short until we get
close to 4.00. Can take on weakness this week.



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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