Linn Group Morning Corn Comment

CHICAGO - May 7/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Friday as the soybean surged higher and
dragged the rest of the grains higher as the demand for US beans has
increased and the market is now worried about bean acres getting planted.
The July and December contracts closed about 10 cents higher near the highs
of the session.  Corn traded higher most of the trading day, but made the
highs as soybeans took off to the upside in the last 30 min of the trading
day.  The outside markets were also supportive of the grain markets with
crude up over $2, the Dow higher and the US$ slightly lower.  Weather is
still the main feature of the corn market with much of the upper Midwest
having the opportunity to plant this week, but the lower ½ of IL and IN are
forecast to receive rains this week, further putting them behind schedule.
Even with the weak demand, corn continues to keep pace with soybeans because
they need to encourage farmers to keep planting corn even as the weather
isn’t ideal.  Farmers like to plant corn and it is usually more profitable,
but also more expensive to plant.  The demand remains poor for corn as
domestic demand remains weak and that only expects to get worse as live
stock prices continue to go lower and the margins getting weaker.  The
volume was decent, but not big at 200,000 contracts and funds were big
buyers of 10,000+ contracts.

Overnight, corn led the grains lower early only to recover later in the
trading session as the soybeans rallied.  The July and December contracts
closed about 4 cents lower, but that we about 8 cents off the lows that were
made early in the trading session.  The weather across most of the Midwest
was good and allowed farmers to get out in the fields and get some work done
or at the least, it allowed the ground to improve so farmers will be able to
plant this week as most of the Midwest looks clear with only the chance of
scattered showers in the middle of the week.  We will get planting progress
report this afternoon after the close.  The market is expecting about 35%
planted which is way behind the 5 year average.  The market was lower last
night, probably on the better chance of planting weather this week, but it
will not be full gear ahead across the whole Midwest as there are still some
areas that are wet and some areas are going to be at risk for rains this
week.  This seems to be the story right now, there is going to periods of
good planting weather, but we will have brief periods of rain that will not
allow a big push in planting.  The outside markets are supportive this
morning with the Dow and crude higher and the US$ slightly lower.  Corn is
still a follower right now, watch the bean market for direction.  The upside
is probably limited in corn because of weak demand, but the downside
probably supported because planting is still very far behind.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCK9                403^0    -3^2                  403^0    395^2    183

ZCN9                409^4    -4^2                  413^6    402^2    12472

ZCU9                419^0    -3^4                  422^4    411^6    1130

ZCZ9                 429^2    -4^0                  433^0    421^4    3365

Early Opening Calls: off 2-4 cents

Top News

-- Analysts expect the USDA's weekly crop progress report to show corn
planting at 35% complete, up from the 27% last year & 59% long term average.

-- Hogs & pig products from Alberta Canada were banned by China quarantine
authority, saying the Canadian province had found H1N1 virus in a herd.
Officials in Canada say the herd was infected by a carpenter that recently
had been to Mexico & working on the farm.

-- Tyson Foods 2nd Qtr net loss was $0.28/shr down from last year's
$0.02/shr loss, they note operation losses from their chicken division was
$46 mln vs. the prior quarter's $240 mln.

-- USDA estimates of the 3.9 mln acres in expiring CRP contracts, it would
extend 1.5 mln acres of CRP contracts to ensure it meets the 32 mln acre
ceiling that was set in the 2008 farm bill.

-- Futures industry group in China trading volume report shows April volume
rose by 60% to 172.7 mln contracts traded, while the Jan-Apr period was up
33% to 538.6 mln contracts traded.  The group noted a sharp rise in base
metal & agriculture futures trading as the markets with the most gains in
volume.

-- CBOT Corn Delivery: 1668

-- Dalian Sep corn futures were 2 Yuan better at 1,670 Yuan/mt.($1 = 6.83
Yuan)

-- Liffe Jun corn futures were +3.00 euro better at 143 euros/mt.

-- Globex Corn Vol: 184,383; Pit Vol.: 21,616; Open Interest change: + 9,709

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

-- Outside markets: Energy Complex -0.32 at $52.88; Gold & Silver: +4.5 at
$891.0 & +0.079 at $12.462; US $ is slightly better vs. Yen & Euro.

Cash Markets

-- CIF Corn steady up 1. May +36 to +38,June +39 to +40, July +40 to +43,
Aug. +38 to +43, Sept. +45 to +48, Oct. +40 to +??, Nov. +40 to +42, Dec.
+42 to +45, Jan. +37 to +40

TREND:

It was a strong close across the board. Grains tended to reverse weakness
early in the week. Jly wheat closed up 27 cents. Jly corn closed up 28
cents. Jly beans were up 57 cents but meal was up $24 and oil was up 1.10.
Products were up the equivalent of 65 cents gaining on beans. This is very
unusual where tight bean supply situations beans normally leave products in
the dust. This may be due to the fact that the export trade this week moved
more to meal and oil. This should show in the export sales report next week.

Beans continued to lead the trade this week with the front months back to
new highs. The May contract did not hold up on the rally Fri with some small
deliveries. Part of this is the export bean demand moved to Jun-Jly as the
spot program at the gulf is covered. Bean supplies continue very tight so
look for this contract to track better in coming days.

The corn trade is trying to build a base to rally more. The upside counts on
CN are 4.40 to 4.50 but getting above the Jan highs will be a big trade
that might propel this trade even higher. Hard to see the bean complex go
sharply higher without taking the corn along for the ride

Earlier this week I tried to temper some of my bearishness in wheat. The
offers to Egypt found US soft wheat not so out of the market? Hi-pro hard
wheat values firmed this week in response to mill demand to replace
potential lost spring wheat production and quality concerns in Tex and Okla.
World is still awash in wheat and new crop harvest is starting in many
producing countries. US harvest in the deep south is only weeks away as
well. Be careful with shorts here as this market could move to test the Jan
highs on the weekly chart shown at the left



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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