Linn Group Morning Corn Comment

CHICAGO - Nov 20/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly lower after trading down near the lows of
the day with some months making new lows, but it found some buying in the
last couple of minutes.  The December contract closed down 1 ¼ but it was
higher early in the session.  The corn market did open higher, but it
couldn’t hold the gains very long as the market almost asked, what is corn
doing higher?  The grain markets actually held their own against the decline
in the outside markets as we saw crude oil down, US$ higher, and equities
down big.  Some traders/analysts want to say that the grain markets have
gotten into the holiday mindset, but you can’t ignore the range that corn is
in right now and we will have to wait for it to break out.  Nothing new out
on the corn market, the demand for corn is almost non-existent, and the only
really bullish factor right now is there is a tight supply in some parts of
the country.  The weather remains a small factor as harvest in the western
belt is getting completed, but they are still behind and as it gets cold, it
always moves slower.  The weather picture in So. America may help support
grains as parts of Argentina is still dry, but they still have a long time
to go before it becomes a big problem.  The volume remains light at only
185,000 contracts with much of that being spread trade and funds were about
even on the day.

Overnight, the corn market gapped lower and stayed lower into the close this
morning with the December contract closing down 8 cents, right on the lows.
The outside markets all point to a lower opening today, maybe even lower
than where we closed last night.  Weekly export sales released this morning
we about as expected, but when compared to last year, very weak.  What
happens next in the corn is anybody’s guess, but the lower opening last
night and the market staying lower probably has the corn market trying to go
after the lows.  The lows in corn are very supportive right now, but if this
market was to take out these lows and closes lower, watch out because a lot
of traders want to tell you that the harvest lows have been made already.
There is probably some big sell stops below the lows and it will be a big
test of the corn market if the lows come out and it isn’t supported.  There
are brokers/analysts that will tell you the corn market has value you here
at these levels and it will be supported.  You also have to remember that
there is a lot of fund money that is out of the grain markets right now, so
you won’t have the funds to really push the market lower.   The corn market
today will open lower, probably lower than where it closed at 6am, but
remember, it isn’t how we open, but how we close.  When the corn market has
broke lately early in the session it has recovered by the end of the day.
If corn does turn the corner and close a lot lower, watch out.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 370^6    -8^0                  375^0    370^4    4645

ZCH9                386^6    -8^4                  391^2    386^6    2237

ZCK9                398^4    -8^0                  402^0    398^2    449

ZCN9                410^0    -7^2                  413^0    409^4    437

Early Opening Calls: off 8-10 cents

Top News

**USDA Corn 08/09 Export Sales Net: 433,800 mt; 09/10 Net: NONE mt; expected
400-550k mt

-- In a note to investors yesterday JP Morgan said it expects the FED to cut
rates to zero by January to stem deflation.

-- Dalian corn futures on Thursday settled 8 Yuan higher at 1,600 Yuan/mt,
most other contract months were 2 to 9 Yuan higher ($1=6.839 Yuan)

-- Liffe Jan corn futures were off 3.50 euro at 118 euros/mt.

-- Globex Corn Vol: 183,599; Pit Vol.: 30,198; Open Interest change: -
13,564

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. The Corn Belt looks dry today into Saturday. Sunday and Monday may
see some showers favoring the central and eastern areas. Temps normal to
below.

-- Outside markets: Energy Complex -2.92 at $50.70; Gold & Silver: +9.8 at
$745.7 & -0.067 at $9.374; US $ is trading better vs. Euro & is lower vs.
Yen.

Cash Markets

-- CIF Corn steady off 3. LH Nov. +22 to +31, Dec. +35 to +39, LH Dec. +43
to +46, Jan. +30 to +34 Feb. +34 to +37, Mar. +34 to +37, Apr. +34 to +37

TREND:

I was reminded several times today, “It is the economy, stupid!” It finally
came home hard at the end of the day with bonds up 2.5 points, $US very
strong, and the DOW below 8000 testing old lows. Banking stocks led the way
down---Congress not there to bail out the big three auto makers? Feels
bigger than that? Grains tried to ignore the bearish attitude but in the end
the sellers won out.

Willing to press wheat on rallies and that worked again today. Still see
this market testing $4.60 to 4.50. However, the bearish wheat news is
quickly turning more aim at feed grains and this may poison the corn trade
for a while. I will be a buyer of corn on weakness but a trade through the
3.60 lows last week could move this market down another 25 to 30 cents. Corn
is really 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.

Note the carries started to tighten again today. Near the close a large
local clearing firm bot 1500 N/Z9 spreads. Smells like a commercial to me.
Might be as simple as lower futures will not help originations so be bullish
the spreads. They are so close to full carry that there is not a lot of
risk. Elevator hedgers take note---short hedges should be rolled as far
forward as comfortable. Lock in what carries are there.



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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