Linn Group Morning Corn Comment

CHICAGO - Jan 5/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Friday pushed higher by short covering,
higher crude oil, and general uneasiness of the weather forecast in So.
America.  The March contract closed up about 5 cents, which was about 12
cents off the lows made early in the trading session.  The corn market made
it's lows near the opening and then traded within 1-2 cents of the previous
close on Wednesday before rallying late in the day on the back of the other
markets.  Traders/analysts said we saw some short covering heading into the
weekend as many are nervous about the dryness down in Argentina and wanted
to scale back positions.  The weather in Argentina will become a bigger
focus as the crop approaches the mid-July time period here in the US, so the
need for timely rains becomes very important.  Besides the dryness in
Argentina, there was very little fundamental news to boost the market, so
traders/analysts were looking for a reason corn was higher.  The volume was
very light again on Friday at only 76,000 contracts and funds were light
buyers on the day.  We expect the volume to pick up as everybody is finally
back to work, the holidays are behind us, and we have the USDA report a week
from today.

Overnight, the corn market opened slightly lower overnight and traded lower
most of the night.  The March contract closed down about 6 cents overnight
which was still about 4 cents off the lows last night.  No new fundamental
news this morning, but the weather forecast for Argentina over the weekend
added a greater chance for significant rains later this week which will help
some of the very dry areas.  The corn market has rallied the last couple of
weeks on very light volume and traders think we could see a pull back now
that everybody is back from vacation.  I would also expect to see some short
covering in front of the USDA report that will be released on Monday morning
before the opening.  This report will be the final production report for
2008 and it will give us a benchmark for the ending stocks and acres going
forward for next year.  The demand for corn still remains very light and it
isn't expected to get any better going forward.  The corn market should open
lower this morning and then look for direction.  The outside markets should
put pressure on the corn market to start the day and the forecast for So.
America calls for good rains at the end of the week, so that could add some
pressure as well.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH9                406^4    -5^6                  413^0    402^2    5658

ZCK9                416^4    -6^2                  423^0    413^0    223

ZCN9                427^0    -6^0                  433^2    424^2    408

ZCU9                443^0
0

Early Opening Calls: off 4-6 cents

Top News

-- CEO of BlueFire ethanol said the company is delaying their latest
construction project in Lancaster, CA. by as much as 6 months, while the
company comes to an agreement with its funding partners.

-- Pending Tender: Japan on Friday, Jan 2nd said it was seeking 30,000 mt of
feed Wheat under their SBS system on January 7th, they're also seeking to
import 200,000 mt of feed Barley in the SBS system on the same day.

-- Friday's USDA Recap: Corn 08/09 Export Sales Net: 269,900 mt; 09/10 Net:
NONE mt; expected 250-400k mt

-- May Dalian corn futures were 11 Yuan better at 1,553 Yuan/mt.($1 = 6.84
Yuan)

-- Liffe Mar corn futures were off 0.75 euro at 123.75 euros/mt.

-- Globex Corn Vol: 66,671; Pit Vol.: 4,578; Open Interest change: + 493

-- Outside markets: Energy Complex -0.46 at $45.88; Gold & Silver: -30.8 at
$848.4 & -0.736 at $10.759; US $ is slightly better vs. Yen & Euro.

Cash Markets

Bean     Barge     Corn Barge       SRW Barge       HRW Track       Ill Riv
Frt

Jan       +65/68F  +41/43H          -60/-50H            +68/70H
400

Feb       +50/60H  +42/44H          -50/-35H            +67/75H
385

Mch      +40/50H  +42/45H          -35/-25H            +69/77H
365

Truck    Beans   Corn     Wheat   Meal     Hi-pro    Oil

Chicago -5H      -19H     -130H

Toledo  -10H      -10H     -124H

Dec ILL +5H      -5H                  +2 F     -150 F

TREND:

In two weeks of holiday trade the market tended to rally sharply. On Monday
of this week that rally seemed to come to an end with big reversals down.
Corn actually had an outside day. Since that trade the markets have crawled
back to test the highs or actually take them out. The catalyst may be the
outside markets where we have seen some major changes. Charts are shown
below

The day charts on the US dollar has a big top but when looking at the weekly
charts the retracement was slightly more than half of the rally and has
really held above the initial resistance area of 80.00. One may question as
to whether this is a rally in the dollar or a break in the other currencies
represented. That may be the case and the cutting of interest rates there
has a bearing on the eventual demand for dollars---security and safety is
part of this trade.

Corn left gaps with the Dec expiration remain. The bearish outside day
reversal got no respect. The only grain market that closed lower on the week
is a warning---even if only 2 cents. The fact that we are already at the
first Fib retracement is also a warning. But---a higher close early next
week will take this market to 4.50 and possibly point to a test of the break
out that also coincides with a 68 pct retracement?



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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