Linn Group Morning Corn Comment

CHICAGO - Jan 26/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on Friday, but well off the highs as
the market set back near the end of the day.  The March contract closed
about 3 cents higher, but 10 cents off the highs as the soybean market sold
off late in the trading day and pulled down the other grain markets.  The
grain markets seemed to decide that the forecast for rain in So. America
didn't mean anything and the market was going to go higher.  The talk of
reduced production in Argentina seemed to get some legs on Friday when the
Buenos Aires Grain Exchange estimated that they see corn production falling
30-40% this year because of drought and that the damage has been done and
any rain going forward will have a limited affect on increasing production.
Everybody seemed to be talking about reduced production, but this
announcement seemed to be some numbers to the talk.  Argentina is the 2nd
largest corn exporter in the world, so even with the big ending stocks
number here in the US, much lower production in Argentina should have a
positive affect on the market, even if it is muted.  The volume on Friday
was light at only about 130,000 contracts and funds were net buyers of about
3,000+ contracts.

Overnight, the corn market closed higher, right on the highs after being
lower earlier in the session.  The corn market opened about unchanged,
traded higher before selling off as news out of So. America said the rains
were good over the weekend.  The corn market then traded lower most of the
night before turning higher in the middle of the night and gaining momentum
toward the end of the trading session.  The forecast for So. America this
week is for good opportunities for rain and lower temps, but there is no
general soaking rain, only rains that are trying to keep up with
evaporation.  Trading weather markets are very difficult and seem to make
even the best traders more humble.  You can't ignore a market that wants to
contradict what the fundamentals are telling you.  The fundamentals in corn
right now are a mixed bag with weakening demand, a big supply here in the US
and across the world, but lower production in So. America.  We are seeing
this market being supported on lower volume levels, but it can get very
expensive to ignore this market.  The corn market will be called higher this
morning and it will gain some support from the outside market as the US$ is
down this morning and the crude is higher.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH9                398^2    7^6                   398^2    383^6    6664

ZCK9                408^0    6^4                   408^0    394^4    221

ZCN9                419^0    7^0                   419^0    405^6    98

ZCU9                419^0    -3^2                  424^4    418^6    19

Early Opening Calls: 5-7 cents better

Top News

-- 50,000 mt of optional origin feed Barley is being tender for by Jordan's
gov't controlled grain buyer on Feb 18th.  Shipment is expected for April.

-- 15,000 mt of Barley were tendered for on Monday by Israeli firm

-- Dalian Commodity Exchange is closed for the Chinese New Year holiday. It
will reopen on Mon, Feb 2.

-- US Pres. is expected to direct the EPA agency to pass California's waiver
for a state program that is expected to cut automotive gas emissions by 30%
by 2016.

-- Pending Tender: USDA issues tender to purchase 17,000 T sorghum to be
donated to Zimbabwe

-- CFTC spokesperson says the commission will extend the period to review
the CBOT's proposal on non-grain firm limits on delivery certs to Feb 4,
2009.

-- Liffe Mar corn futures were 2.00 euro better at 140.5 euros/mt.

-- Globex Corn Vol: 119,823; Pit Vol.: 9,018; Open Interest change: - 2,695

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

-- Outside markets: Energy Complex -0.71 at $45.76; Gold & Silver: +7.2 at
$902.8 & +0.027 at $11.982; US $ is slightly lower vs. Euro & is better vs.
Yen.

Cash Markets

-- CIF Corn steady off 3. Jan. +59 to +61, Feb. +54 to +56,  Mar. +51 to
+53,  Apr. +39 to +42, May +39 to +42,June +37 to +39,July +37 to +39, Aug.
+38 to +44, Sept. +40 to +43, Oct. +40 to +??

TREND:

Have to be impressed with wheat in that it did not break down after the
reversals early in the week. Still some work to do here but this market is
looking very much like it wants to go test out the recent highs. Take them
out and it could rally another $1.00. Anyone expecting that?

Poor corn --- not able to buy acres? Go look at what it is doing vs. Nov
beans and you may change your mind.



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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