Linn Group Morning Corn Comment

CHICAGO - Feb 4/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market sold off on Tuesday as rains fell across Argentina and the
market is looking at the demand destruction getting worse.  The March
contract closed down about 10 cents after rallying at the end of the day
about 5-6 cents off the lows.  Argentina received good rains which will help
stabilize the corn crop, but won't cure the drought situation they have been
going through over the last couple of months.  The demand for corn remains
weak as feeders and ethanol are getting smaller and the overall world
economies are not expected to get any better anytime soon.   There has been
a lack of farmer selling so far and farmers will need to start selling as
they will need money.  The grain markets are going to be led by the soybean
market right now as the rains in So. America will have a material affect on
the soybean market as the damage in corn is probably already done.  The
volume yesterday was pretty good at 193,000 contracts, but traders said
almost 30% of that volume came in the last 30 min of the day.  Funds were
net sellers of close to 6,000 contracts.

Overnight, we saw the corn market trade higher most of the night, closing
about 1 higher.  The fundamentals for corn remain very negative as cattle
herds are getting smaller and ethanol plants are producing less ethanol
which means less corn used.  Weekly export sales will be released tomorrow
morning so we will see if we continue to see good numbers, but the export
sales are almost 50% behind last year.  Traders said the market is starting
to look toward the USDA stocks report on Feb 10th which is expected to show
a bigger increase in the carryout.  This is telling the market that even
with a big reduction in corn acres, prices don't need to respond to this
reduction.  So. Korea bot 110,000 tons of US corn overnight.  The corn
market were slightly higher overnight, but I don't know how much carry
through we can see with corn as all the fundamentals are negative.  The corn
market will be slightly higher this morning, but I think beans will be the
leader in the grain complex right now.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH9                362^4    0^6                   365^0    361^0    3667

ZCK9                373^4    0^6                   376^0    371^6    787

ZCN9                384^0    1^0                   386^2    383^0    429

ZCU9                396^0    2^6                   396^0    393^0    14

Early Opening Calls: 1-3 Higher

Top News

*USDA reports private sale of 116,000 mt of Corn sold to S Korea for the
08/09 MY

-- Korea Feed Assoc. on Tuesday bought 55,000 mt of Corn from Cargill at a
reported price of $199.27/mt, acc. to merchandisers, the grain is for
delivery on May 5th

-- Russia's gov't in Wednesday's intervention tender bought 2,700 mt of Corn
& 18,360 mt of feed grade Barley

-- 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.

-- Pending Tender: EU traders report a group of private Israeli buyers have
issued a Wed. Feb 4th tender to buy 32,000 t of corn and 27,000 t of corn
products and soymeal. The corn may be purchased from the U.S., Europe or
South America.

-- Pending Tender: CCC seeking 74,500 mt of Sorghum for Somalia in Feb 4th
tender.

-- Pending Tender: 15,000 mt of feed Barley was being sought in Jan 28th
tender floated by Israel for shipment between Apr 25-May 15

-- Pending Tender: 150,000 mt of opt. origin Corn is sought in a Jan 31
Pakistan TCP tender.

-- Pending Tender: 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.

-- Pending Tender: Ministry of Agriculture in Japan reports that they are
seeking to buy 34,000 T of food barley and 7,500 T of beer barley. Closing
date is Feb.18th.

-- May Dalian Corn futures were 5 Yuan better to 1591 Yuan/mt ($1= 6.84
Yuan)Dalian

-- Liffe June Corn futures up 1.25 euro better to 139.5 euros/mtLiffe

-- Globex Corn Vol:162,585 17,528 ; Pit Vol.: 17,528 ; Open Interest change:
-14,292

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

-- Outside markets: Energy Complex +.97 to $41.77 ; Gold & Silver:+13.4 to
905.4 ;+ .21 to 12.50 US $ +.49 to 85.940

Cash Markets

-- CIF Corn steady firm.FH Feb. +57 to +??, Feb. +56 to +59,Mar. +54 to +56,
Apr. +41 to +44,May +41 to +44,June +38 to  +42,July +38 to +42, Aug. +37 to
+45, Sept. +41 to +45, Oct. +40 to +47

TREND:

Wheat went right to that reactionary low again at 5.48 and bounced unable to
penetrate that level for the second day. The wheat/corn spreads continued to
gain again today until the close when corn gained hard on wheat---some
spreading and some late flat price buying.

Corn also managed to get the stops early in the day and languished all day
in very thin trade.  Rally back was rather anemic but appeared to be typical
Asian buying---scaled down to price basis contracts all day but bunched on
the close to get what was needed total for the day.

Everything looks pretty grim at the close. Bearish attitudes abound. First
two days so weak that there seems little chance of a rally back this
week---yet into the close the $US was very weak, crude back up and equities
showing some bounce.



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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