Linn Group Morning Corn Comment

CHICAGO - May 12/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was pretty quiet on Monday as the market awaited the
planting progress report after the close and the USDA supply/demand report
on Tuesday morning before the opening.  The July and December contracts
closed about unchanged, slightly higher after trading slightly lower most of
the day in only a 4 cent trading range.  The corn market felt some weight
from the outside markets, including the Dow and the soybean market.
Soybeans were lowering early in the session but scratched their way up to
close higher on the day.  The delay in planting in the ECB is still not
considered serious by the market as last year was just as bad and the crop
turned out fine, but one analyst cautioned that might not happen last year
as we had an almost perfect growing season after the corn was finally
planted.  The plant progress will take a back seat to the supply/demand
report out this morning, but the soybeans will be at the forefront of this
report and will probably dictate the direction for corn.  The 09/10 ending
stocks will be more important for corn than 08/09 as the lack of demand
means we run out of corn in the next few months and decline in feed needs
should keep rallies in check, but it will probably be hard to break this
market.  Remember, these are futures markets and will trade based on future
information, not the current situation.  The volume was lighter yesterday,
148,000 contracts, but that wasn't unexpected with the report Tuesday
morning and funds were small buyers.

Overnight, the corn market was slightly higher closing up 3-4.  Plant
progress after the close showed 48% of the corn planted vs. 33% last week
and 71% 5yr average.  The big trouble is in IL and IN which are only 10% and
11% planted respectively, which is way behind the 5yr average.  The market
was expecting 45-55% planted.  Also as expected, IA, MN, and NE are ahead or
at the 5yr pace.  The USDA report this morning certainly gave the bulls the
news they were looking for to feed the recent rally.  The USDA lowered 08/09
carryout from 1.700 to 1.600 increasing ethanol and exports.  In 09/10, they
lowered the carryout to 1.145 by reducing acres and yield as well as
increasing feed/residual and exports.  This makes the ending stocks a lot
tighter than the market was expecting and if we get a further reduction in
yield, which some think in inevitable, we could see end stocks down around
900.  We still have a long summer in front of us before we can get too
excited about the carry out next year, but it will put a scare into some of
the bears that felt we couldn't rally corn significantly.  I have been
saying that corn needs a reason to continue to rally and this shot across
the bow by the USDA today maybe the catalyst.  The weather forecasts this
morning are bullish with most of the Midwest to receive rain every couple of
days over the next week or so keeping planting in the ECB at a snails pace.
The outside markets are supportive with the US$ making new lows and crude
trading over $60 earlier this morning.  Remember, it isn't how we start the
day, but how we finish.  I have been hearing opening calls today from 5
higher to limit up.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCK9                416^4    3^0                   416^4    413^0    70

ZCN9                424^6    3^4                   425^0    420^0    7051

ZCU9                433^0    3^4                   433^0    428^6    758

ZCZ9                 443^6    3^4                   444^0    439^2    3441

Post-Report Opening Calls: 8-10 cents better

Top News

**US May Corn 09/10 Carryout: 1.145 bln bu.; est. 1.39

**US May Corn 08/09 Carryout: 1.60 bln bu.; est. ; Apr Rpt 1.70

**World 09/10 Corn Carryout: 128.2 mmt

**World 08/09 Corn Carryout: 139.58 mmt; Apr Rpt 143.3

**May Argentina 09/10 Corn Output: 15.0 mmt

**May S Africa 09/10 Corn Output: 11.5 mmt

**May China 09/10 Corn Output: 0.50 mmt

-- USDA Corn crop progress data shows 48% has been sown inline with last
year's week, but still lagging the 5 yr avg of 71% complete.

-- Monday's USDA Weekly Corn Inspections: 46.109 mln bu ; expected 32.5 mln
bu

-- Dalian Sep corn futures were 1 Yuan better at 1,659 Yuan/mt.($1 = 6.83
Yuan)

-- Liffe Jun corn futures were +1.50 euro better at 149 euros/mt.

-- Globex Corn Vol: 135,629; Pit Vol.: 11,159; Open Interest change: + 9,503

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

-- Outside markets: Energy Complex +1.41 at $59.91; Gold & Silver: +8.4 at
$922.0 & +0.276 at $14.190; US $ is off vs. Euro & Yen.

Cash Markets

-- CIF Corn steady. May +35 to +37,June +36 to +38, July +38 to +40, Aug.
+36 to +41, Sept. +44 to +48, Oct. +40 to +42, Nov. +40 to +44, Dec. +43 to
+46, Jan. +36 to +40

TREND:

Crop report in the AM will make comments tonight obsolete by the time you
read them. I am concerned that the market has already discounted some of the
more bullish items that can surface tomorrow. So it is possible to get a
bullish report and not have the market extend recent gains. Does not make
them any less bullish---but the character of the market may want to be out
of length on a bullish report?



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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