Linn Group Morning Corn Comment

CHICAGO - Jun 9/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Monday pressured by what some felt was bearish
weather over the weekend and the surging US$.  The July and December
contracts closed about 9 cents lower, near the lows of the session on really
a pretty quiet trading day.  After making new lows last week, the US$ is
about 300 pts off the lows and was trading much higher on the day before
setting back after the grains closed.  With little to no new news on the
corn market, it will look to outside markets for direction and the US$ is a
huge determinant of price direction for US exports.  The crude oil market
was mixed yesterday, trading higher and lower at different times during the
day.  The rains missing some of the wettest areas across the ECB and the dry
areas of the WCB getting rain, was looked at as bearish by the market.  Some
of the WCB was getting very dry and they received much needed rains over the
weekend that won’t end the dryness, but will definitely help planted crops
grow.  The missed rains in the ECB will help them keep planting and get
caught up.  On the other side, the ECB is supposed to get rain this week
that will probably stop planting.  With corn taking out the January highs
last week, corn reached its goal and with the demand still anemic, it just
couldn’t push through and it saw profit taking yesterday, especially with
the USDA report tomorrow morning.  Traders/analysts also said that the
weakness in wheat also helped pull corn down.  Wheat was down almost 30
cents yesterday and a lot of traders have been trading the wheat/corn
spreads.  The volume was good yesterday at 246,000 contracts, but with OI
higher, most of this volume was probably spread trade as big funds are
rolling from July into Sep and Dec.  Funds were sellers of about 10,000+
contracts.

Overnight, corn recovered some of the sell off yesterday as the outside
markets were supportive.  The July and December contracts closed up about 4
cents, near the highs of the session as traders square positions before the
USDA report tomorrow morning.  Crop progress was out after the close and it
was right inline, emergence was behind the 5yr average which isn’t
unexpected because of the ECB.  You can see the details below.  The outside
markets were supportive with crude oil trading up over $1 overnight and the
US$ down over 50 pts.  The weather picture has rain across most of the
Midwest with is good for WCB and bad for the ECB which seems to be the theme
this spring/summer.  With the USDA report tomorrow morning, traders will
look to square positions today and we expect a light day of trading.  I
don’t expect any major changes tomorrow, historically, the USDA has looked
to make major acreage changes in the report at the end of the month.  We may
see a yield reduction tomorrow, but I don’t know if it is major.
Historically, the USDA likes to ease into any big changes.  I would expect
to see corn open higher in line with the trade last night and then look for
direction and traders trying to even positions ahead of the report.  The
outside markets are supportive and the soybeans continue to go higher, so
that should help pull corn higher.  Corn is stuck in the middle as the
rally’s will be sold and breaks will be bought as the next big market could
be corn, but it will probably be next year, not this summer.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZCN9                439^0    4^0                   439^6    434^4    3566

ZCU9                449^0    4^2                   449^2    444^0    1038

ZCZ9                 462^2    4^2                   462^6    457^4    1901

ZCH10              473^0    3^6                   473^0    468^4    156

Early Opening Calls Corn 4-6c Higher

Top News

**CME announced June 5th that electronic trading hours for the CBOT grains,
oilseeds and ethanol contracts will be expanded in the morning by one hour
and fifteen minutes, until 7:15 a.m., beginning July 1.**

-- USDA Ag Attaché says in 2009/10 the share of US corn flowing into the
Taiwan market will drop to 80%, a record low.

-- Analysts expect this week's USDA 09/10 Corn ending stocks at 1.060 bln
bu, while the 08/09 Corn ending stocks are expected to be reported at 1.600
bln bu.

-- 2009 Barley harvest in the Ukraine is pegged at 10 mln mt down 2.6 mln mt
from the 08/09 season total, acc. to Ukraine Ag Minister

-- Through June 5th plantings of spring grains in the Ukraine have risen to
7.62 mln ha, compared to the 7.58 mln ha by the same time last year, acc. to
the country's ministry of agriculture

-- S Africa's Grain Inspection office reports White Corn exports in the
latest week were 76,413 mt while Yellow Corn exports were pegged at 1,086 mt

-- Weekly USDA data shows 97% of the corn crop was planted as of June 7,
compared to last week's 93%; 97% last year & the 99% complete long term
average.

-- Weekly USDA data shows 87% of the Corn crop was Emerged as of June 7,
compared to last week's 73%; 87% last year & the 94% complete long term
average.

-- 2009 US Corn crop conditions: 6% very poor-poor; 25% fair; 56% good; 13%
excellent, while last week they were 4% very poor-poor; 26% fair; 58% good;
12% excellent

-- Head of the CME Group & ICE Exchange tell Congress committee that forcing
all OTC derivatives to clear on exchanges would likely drive that type of
business to overseas markets with potentially less regulation & out of US
jurisdiction.

-- 400,000 mt of environmental credit offsets were sold by Cargill on
Monday.  The company's Canadian beef unit issued those credits & sold them
through the Canadian Standards Assoc.

-- Pennsylvania & Connecticut are added to list of states banned by Russia
for receiving either live hogs or pork products due to H1N1 flu, acc. to a
Russian animal health watchdog

-- USDA Weekly Corn Inspections: 25.98 mln bu ; expected 37.5 mln bu

-- Dalian Jan Corn Futures down -6 Yuan settle at 1,629 Yuan ($1=6.83 Yuan)

-- LIFFE August Corn Futures up +0.75 euro to 155.5 euro/mt

-- eCBOT Corn Vol: 201,082 ; Pit Vol.: 39,246 ; Open Interest change: -6,525

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

-- Outside markets. Energy +1.44 to 69.53; Gold & Silver: +6.7 to 959.5 ; US
$ Slightly better than the Euro and off against the Yen

Cash Markets

-- CIF Corn steady up 1. June +40 to +43, July +43 to +44, Aug. +40 to +43,
Sept. +45 to +48, Oct. +41 to +44, Nov. +41

to +44, Dec. +44 to +48, Jan. +40 to +42

TREND:

Look for a bounce back overnight with a quiet trade in front of the crop
report Wed AM. The market can not get too much positive in the report for
beans but we are on a big rally that may have a tough time carrying---but
reduced world carryout makes it unlikely we break far.

Corn again got back to 15 cents off the recent high today but I was still
trying to defend what was bot last week. Stay tuned. The potential tighter
stocks for next year are still there---just waiting for the market to
realize the need to ration corn use next year just like beans this year.

Wheat can trade down to 5.85 but the stab down below 6.00 is starting to
limit the down side and put some risk in short positions here.



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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