Linn Group Morning Corn Comment

CHICAGO - Jan 6/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly lower on Monday, but well off the lows as a
rally in the energies in the final 15 min of trade pushed the grain markets
higher.  The March contract closed down 1 after making the highs and lows in
the first 15 min of trading.  The corn market opened a little lower than
expected, but quickly rallied off the lows to make the high of the day and
then traded in trading range throughout most of the day.  The outside
markets were a mixed bag for the grains with the higher energy markets
providing support and the stronger US$ providing resistance.  The higher US$
makes US grains more expensive to the rest of the world.  We are starting to
see increased farmer selling as the basis levels have improved and prices
have gone higher, but this selling has also occurred because farmers need
cash.  The weather in So. America remains tenuous as there are many areas
that are dry and in need of rain, which is forecast for later this week.
The corn market seems to have a hard time breaking right now unless
Argentina gets a good rain.  There was some talk of fund buying late in the
day as maybe funds are moving back into the grain markets, but on the other
side, open interest continues to fall in higher and lower markets.  The
volume was better than it has been at 120,000 contracts and funds were
actually small sellers at 2,000+ contracts even though we had fund buying at
the end of the day.

Overnight, the corn market open about unchanged and then went lower only to
change 1-2 higher most of the night before rallying after 3am to close up
about 7 cents right on the highs for the night.  The rally in corn late was
probably due to a change in the weather forecast for So. America raising
temps in the 2nd week and the rains not being as good as previously
forecasted.  The rain forecasted now should be enough to keep up with
evaporation, but it won't help the sub soil moisture levels.
Traders/analysts this morning commented that it will probably be difficult
to break the grain markets until So. America gets some good rain showers.
Informa announced they will release their acreage estimates this morning,
probably around 10:30am CST.  This release is still very speculative.  We
are hearing that fertilizer and nitrogen prices to farmers is coming down,
so this could take away the argument for a big reduction in corn acres
without the much higher prices.  We have been saying that we needed either a
reduction in input costs or an increase in corn prices to get the acres we
need planted.  The corn market should be stronger this morning on the back
of the higher energy markets and the reduction in rains across So. America.
The demand for corn remains very bleak, but you can't deny the higher price
action and trying to pick a top is getting very expensive.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH9                418^2    7^0                   418^2    407^2    6046

ZCK9                428^0    6^4                   428^0    419^2    297

ZCN9                438^2    6^6                   438^2    428^0    300

ZCU9                448^0    6^4                   448^0    439^0    9

Early Opening Calls: 5-7 cents better

Top News

-- 55,000 mt of US/Brazil/Argentina Corn is sought in a Wednesday Jan 7
tender by a feed mill group in S Korea.  Delivery is expected March 10th

-- Informa this week releases their new acreage estimates along with their
estimates of supply/demand.

-- First human case of bird flu in China in over a year takes life of 19
year old woman that had come into contact with poultry, acc. to Chinese
officials.

-- Economic researchers at China's central bank suggest the country will
likely grow at an 9.3% pace in 2009 down from the 9.9% pace in 1Q-3Q 2008,
but still above the 8.0% pace needed for jobs growth & social stability

-- CFTC has been given a request by the CBOT asking the agency to approve a
rule that limits the amount of warehouse receipts & shipping certs, firms
that aren't principally in the grain trade, can hold.  The CBOT will
implement the change by Feb 17th & non-grain firms have until May 31 to
comply.  Corn, Soybean, & Wheat contracts will have a limit of 600
certificates.

-- Monday's USDA Weekly Corn Inspections: 23.360 mln bu ; expected 17.0 mln
bu

-- May Dalian corn futures were off 5 Yuan at 1,548 Yuan/mt.($1 = 6.84 Yuan)

-- Liffe Mar corn futures were 4.00 euro better at 130 euros/mt.

-- Globex Corn Vol: 102,042; Pit Vol.: 10,293; Open Interest change: + 4,993

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip.

-- Outside markets: Energy Complex +0.94 at $49.75; Gold & Silver: -11.0 at
$847.0 & -0.192 at $11.063; US $ is slightly better vs. Euro & Yen.

Cash Markets

-- CIF Corn steady up 2. Jan. +44 to +46, Feb. +44 to +46, Mar. +44 to +46,
Apr. +36 to +38, May +36 to +38, June +36 to +38,July +36 to +38, Aug. +38
to +44, Sept. +38 to +44, Oct. +38 to +45

TREND:

Market marking time. Technical indications continue a lot stronger than cash
warrants?

Corn continues to be the market that should be bot on weakness---had to be
fast today when the market traded 10 lower to start.

Not willing to pay up on any of these trades. See the upside as very limited



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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