Linn Group Morning Corn Comment

CHICAGO - Jan 27/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on Monday as it fell from the early
highs as soybeans sold off in the middle of the trading session.  The March
contract closed up about 3 cents, but about 7-8 cents off the highs.  The
corn market traded in positive territory all day even as the soybean market
sold off and traded lower on the day late.  The corn market is caught
between a rock and a hard place right now as demand is not good, rally's are
limited, but the weather in So. America and the technicals are helping to
support the market.  The weather in So. America improved for soybeans, but
the rains seem a little late to really help the corn market as much of the
crop in Argentina is in trouble and past the stage of getting better yields.
This damage to the Argentine crop isn't expected to really push the corn
market higher, but it can support the market.  The weather in Argentina
continues to support corn as this week looks to have periodic showers, but
no overall general rains that the dry areas need.  The volume was very light
at only 123,000 contracts and funds were slight buyers on the day.

Overnight, the corn market closed slightly lower overnight after trading
higher earlier in the evening.  The March contract closed about 4 cents
lower, right on the low of the day.  The grain markets are actively watching
the weather maps from So. America looking for any deviation from previous
forecasts.  There is very little new fundamental news out on the grain
markets right now, so the markets are trading weather forecasts which makes
these markets very volatile and gives it little direction.  The weather
forecasts this morning has Argentina receiving rains across over 60% of the
country, but the rains are forecasted to be scattered and not providing a
lot of rain.  The weather report I am seeing forecasts that even with the
rains, most areas of Argentina will continue to see net drying over the next
week.  The corn market is in trading range right now that is getting smaller
and eventually when it breaks out to either the upside or the downside, it
could be dramatic.  The corn market will be called slightly lower this
morning, in-line with where it closed last night.  I would expect to see 2
sided traded unless the weather maps change.  There is very little positive
news in the corn market today except for the weather in Argentina, but the
market can't seem to really break down.  There is plenty of corn available
across the world, but if we were to see an increase in demand, watch out.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH9                389^6    -4^0                  396^2    389^6    3712

ZCK9                401^0    -3^6                  407^0    401^0    357

ZCN9                411^4    -3^6                  417^6    411^4    315

ZCU9                422^0    -3^6                  428^0    422^0    18

Early Opening Calls: Corn lower

Top News

-- USDA Ag Sec Vilsack says meat country of origin labeling rules approved
toward the end of the Bush administration are currently under review by the
new administration.  The rule was published in the Federal Register & was
expected to go into effect March 16th.

-- USDA Ag Sec. also says the new administration was reviewing & allowing 60
days of additional public comments regarding farm subsidy rules, he also
suggested the agency will promote to include funds for anti-hunger programs
in the economic stimulus package & modernizing the food safety system.

-- More should be done to accelerate commercialization of producing non-food
plant sources for biofuels, acc. to new USDA Ag Sec. Vilsack.  He also
suggested the agency develop guidelines to promote improved ethanol plant
efficiency.

-- Canadian grain production for 09/10 is expected lower by 6.1 mln mt to
66.5 mln mt, acc. to Agri-Food Canada.  However, they expect exports this MY
at 32.1 mln mt up from the 31.7 in the 08/09 year.

-- Head of ethanol producer Poet says the firm may consider bidding on some
of bankrupt VeraSun facilities.

-- China's Dalian exchange, Malaysian Bursa, & Indonesia's markets are
closed for the Lunar New Year & are to resume trading on Feb 2nd

-- Pilgram's Pride is seeking approval from its bankruptcy court to sell 3
grain elevators to ADM for an estimated $5 mln, acc. to court documents.
Two of the elevators are in Indiana & the third is in eastern Illinois.

-- Pres. Obama & Brazil's President spoke on Monday, with an agreement to
meet in March to further discuss working together on biofuels & global trade
talks.

-- Russian ag ministry data shows the country exported 11.16 mln mt of Wheat
from July 1 to Jan 20th.  Data also shows 1.54 mln mt of Barley have been
exported since the beginning of the 08/09 MY.

-- Monday's USDA Weekly Corn Inspections: 27.350 mln bu ; expected 25.0 mln
bu

-- S Africa's crop estimating committee says Corn plantings for the 08/09
season were only 2.6 mln ha down 0.2 mln ha from the prior season.  They
noted late planting season rains helped in the decline of planted acres.

-- 33,014 mt of White Corn were exported from S Africa in the week ending
Jan 23.  They also exported 1,982 mt of Yellow Corn.

-- China's Dalian exchange, Malaysian Bursa, & Indonesia's markets are
closed for the Lunar New Year & are to resume Feb 2nd

-- Liffe Mar corn futures were 2.00 euro better at 143 euros/mt.

-- Globex Corn Vol: 111,925; Pit Vol.: 7,034; Open Interest change: + 4,508

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

-- Outside markets: Energy Complex -0.59 at $45.14; Gold & Silver: -7.1 at
$901.7 & -0.060 at $12.065; US $ is slightly better vs. Yen & is off vs.
Euro.

Cash Markets

-- CIF Corn steady off 3 Jan. +56 to +60, Feb. +53 to +55, Mar. +48 to +50,
Apr. +38 to +41,May +38 to +41,June +38 to +41,July +37 to +39, Aug. +37 to
+42, Sept. +37 to +42, Oct. +40 to +47

TREND:

The corn market continues to struggle with the $4.00 price level. Basis
gains have been okay on growing export demand but domestic interest has
slowed. The SE still has a lot of imported feed wheat to struggle through.
Some indications that poultry margins have improved back to near break even
but the pork and cattle markets have only limited ability to lock in black
margins in deferred contracts. A Tex ethanol plant closed over the weekend
with the Herford plant forced into bankruptcy due to construction problems.
That is two more down in a period that has more probably coming. Those
western plants that are still profitable are there due to firming DDG
values---some 20 to 25 pct over corn. The eastern market is not that strong.
But---I am reminded that you gain 1 bu of corn in feed for every three cut
out of ethanol production.

Look for the flat price struggle to continue to hold small breaks and extend
gains but these may be led by the wheat or bean market.



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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