Linn Group Morning Corn Comment

CHICAGO - May 13/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market responded to the USDA report and continued forecast for
rains across the ECB this week by rallying into new highs and technically
opening up a run at the January highs.  The USDA report actually lowered the
old crop stocks which was a little unexpected and they lowered the
anticipated yield for the new crop as the ECB is way behind in planting and
that is sure to have some affect on yields, unless the WCB makes up for it.
We still have a long growing season in front of us, but it will give pause
to some traders that want to hold shorts in the corn.  The fear is that we
could lose more acres over the next week or so and that could take corn
carryout even lower, but it will still take demand to push prices a lot
higher.  Some traders want to talk about the excess wheat moving into feed
circles which will lower feed needs and thus lower feed demand.  The current
weather forecast has rains across most of the Midwest today and tomorrow and
then again over the weekend.  This is especially troubling for the ECB which
is already wet and even small rains stops them for a couple of days from
getting into the fields because the ground is already so saturated.  Cash
traders said we saw heavy farmer selling yesterday in both old crop and new
crop as the December contract traded up near the $4.50 price level.  We had
big volume in corn yesterday at 384,000 contracts and funds were buyers of
15,000+ contracts on the day.

Overnight, corn continued to move higher led by the soybeans, probable
continued fund buying, and strong technicals.  The December contract was up
about 7 cents last night and the July was up about 6 cents, both right on
the highs of the night session.  The USDA switched the emphasis from oil
seeds to feed grains with the estimated carryout number they gave the market
yesterday.  The USDA put on notice that if we don't have good crop yields or
enough corn acres, we could have a reduced carryout situation in the US and
that is with just a slight increase in demand.  I still don't know if corn
can really take off to the upside at this time of the growing season as the
demand situation isn't here this year.  We are starting to see funds come
back into the grain markets and we have seen that money buying corn lately
as you saw big volume and fund volume yesterday.  The USDA report probably
moves to the side now that it is over and weather once again is the main
focus.  As I write this morning, storms are going across most of IL and IN
which will set back planting another couple of days.  The current forecast
has more rain coming in this weekend, so I would guess many farmers in some
of the wettest areas aren't planting until at least the middle of next week.
Corn will be called 5-7 higher this morning, but the outside markets have
gotten weaker since the grains closed, so that could put some pressure on
the grains, but I don't know if the market is watching the outside markets
as much as they have in the past.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCK9                425^0    5^4                   425^6    420^4    236

ZCN9                433^4    6^0                   434^0    427^0    9991

ZCU9                443^0    6^6                   443^2    436^2    490

ZCZ9                 455^2    7^2                   455^4    448^0    5773

Early Opening Calls: 3-5 cents better

Top News

-- Israel is seeking 15,000 mt of EU origin feed Barley in a May 14th tender

-- 114,000 mt of Corn was delivered by farmers during the week of May 8th to
silos in S Africa.  They brought 53,000 mt of White & 61,000 mt of yellow
corn.

-- Corn farmers in Germany are expected to plant the same amount of acreage
in 2009 as they did last year when they planted just over 2.0 mln ha.  An
industry survey shows the varieties grown will be shifted more toward
biofuel use and away from food/feed use.

-- Chinese financial press reports the gov't will allow a trial of consumer
consumption finance companies that will make loans for home appliances and
other consumption goods.  The finance companies will only lend & not take
deposits nor collateral & the borrow will be able to borrow up to 5 times
their monthly salary.

-- 2009 worldwide oil demand is expected to drop by -1.6 mln bpd to a 84.03
mln bpd pace, acc. to OPEC report

-- Dalian Sep corn futures were 7 Yuan better at 1,666 Yuan/mt.($1 = 6.83
Yuan)

-- Liffe Jun corn futures were +6.00 euro better at 155.5 euros/mt.

-- Globex Corn Vol: 353,974; Pit Vol.: 25,974; Open Interest change: +
38,829

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

-- Outside markets: Energy Complex -0.06 at $58.79; Gold & Silver: -2.3 at
$921.5 & -0.242 at $13.994; US $ is slightly better vs. Euro & is off
slightly vs. Yen.

Cash Markets

-- CIF Corn off 1 to 3. May +32 to +34,June +35 to +36, July +37 to +39,
Aug. +36 to +38, Sept. +42 to +45, Oct. +39 to +40, Nov. +39 to +41, Dec.
+42 to +45, Jan. +37 to +40

TREND:

The corn market has opened up new potential as shown in charts below. Unlike
beans, this market will be new crop led. But old crop carries are wide
enough that the strength in new crop will tug the old crop along.



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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