Linn Group Morning Corn Comment

CHICAGO - May 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 Tuesday, but off the lows made
early in the trading session.  The market was lower early in the trading
session on worries about government support for ethanol and planters finally
rolling in much of the Midwest or at the least, better weather forecasts for
planting in the next week or so.  The July and December contracts closed
about ½ lower.  The weather picture seems to have cleared up going forward
as some of the rains yesterday weren’t as big as predicted and the next week
to 10 days has opened a window for farmers to get corn in the ground.  There
is no question that corn planting is way behind, especially in key corn
growing states, but as we learned last year, farmers today can plant a lot
of corn very quickly.  Assuming the weather forecast doesn’t change a great
deal over the next week or so, there will be a lot of corn planted this week
and next week.  The corn market also sold off early on the EPA announcing a
new alternative fuel standard that will likely prohibit some corn ethanol
production processes based on their greenhouse gas emissions.  This is
similar to what we saw out of California a couple of weeks ago, but this
announcement said ethanol was a “bridge” to future alternative fuels and was
troublesome to ethanol, but more long term than short term.  There was some
talk that current ethanol plants would be grandfathered.  The volume was
still good yesterday at 193,000 contracts and funds were small sellers.

Overnight, corn closed slightly higher, up about 1, as the soybeans
rebounded and the outside markets were supportive.  The corn market traded
slightly lower to unchanged most of the night before closing just higher.
There isn’t really anything new to talk about for corn right now as planting
picks up as soils dry out and rains are scattered.  The domestic demand,
feed and ethanol, is still relatively weak and not expected to improve
anytime soon.  This will probably keep a lid on corn prices for the time
being unless the soybeans take off to the top side and drag corn with it.
Corn could gain momentum later in the summer depending on acres planted,
weather, or an increase in demand, but right now, corn should have trouble
rallying on its own.  The outside markets are higher this morning which
should help the grain markets, but I think the markets are largely ignoring
the outside markets right now and increased corn planting or lighter than
expected rains today will weigh on the corn market.  The weather forecasts
will be very important today to see if the rain falls in the areas predicted
and how much falls in these areas.  Some areas already have high soil
moisture levels and do even another ½ in of rain can push them back another
couple of days.  Longer term forecast has it drying out next week, but that
will just be another week later that corn is getting planted.  Corn should
open slightly higher, but watch other markets for direction.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCK9                399^2    0^6                   400^0    396^0    32

ZCN9                406^0    0^6                   407^0    403^0    3795

ZCU9                415^0    0^6                   415^4    412^2    91

ZCZ9                 426^0    1^0                   426^6    422^6    639

Early Opening Calls: 1-3 cents better

Top News

-- EPA says the 2010 mandate to use 12.9 bln gallons of renewable fuel
sources does not need to be waived; the agency notes some ethanol plants do
not meet requirements for carbon dioxide emissions.

-- Port officials in Brazil's Santo say stormy conditions caused 2 ships to
collide damaging loading equipment, however 2 other loading berths are
available at the terminal.

-- WASDE moves country level 09/10 world wheat, rice, oilseed, cotton &
coarse grain supply/demand projections to May's report, in the past the next
crop year projections were issued with the June report.

-- WASDE in May's report will also release projected figures for US dairy,
livestock & poultry for calendar year 2010

-- Dalian Sep corn futures were unchanged at 1,662 Yuan/mt.($1 = 6.82 Yuan)

-- Liffe Jun corn futures were off -0.75 euro at 142 euros/mt.

-- Globex Corn Vol: 175,199; Pit Vol.: 15,140; Open Interest change: + 1,395

-- CBOT Corn Delivery: 37

-- CBOT Ethanol Delivery: 60

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

-- Outside markets: Energy Complex +1.73 at $55.57; Gold & Silver: +10.0 at
$907.7 & +0.114 at $13.421; US $ is off slightly vs. Euro & Yen.

Cash Markets

-- CIF Corn steady up 1. May +38 to +42,June +40 to +42, July +42 to +44,
Aug. +39 to +44, Sept. +45 to +48, Oct. +40 to +43, Nov. +41 to +44, Dec.
+43 to +45, Jan. +38 to +40

TREND:

In the corn market stumbled but should remain supported above the 3.95 break
out area. The market will spend some time here but may get over the fear
that ethanol use is going to be pared. The more prudent fear should be aimed
at the lack of feed margins in any of the feed sectors. The coverage has not
been extended in most of the industries---not only are margins bad but the
equity needed to run a hedge program is limited. Sellers are not anxious to
extend feed to firms on the brink? Applies to hogs, dairy, and cattle.

Note the USDA will issue the world new crop bean outlook next week along
with new crop US. This is the first time the bean outlook will be issued
this early along with wheat and corn. Not sure there is a reason other than
it is done? I look for major changes in the old crop with the potential of a
7 to 9 MMT draw down in old crop stocks. This opens the new crop to
tightening as well. The reduction in So Amer will keep US exports strong
into the spring of 2010. Same in crush.



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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