Linn Group Morning Corn Comment

CHICAGO - Jun 24/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on the day after we saw a 2 sided
traded most of the day.  The July and December contracts closed up about 3-4
cents on a rally late in the session and the market closed near the high of
the day.  Corn sold off early, but inched higher the rest of the day as the
soybean market rallied and the outside markets were supportive.  The soybean
market bounced back from the sell off on Monday to recapture all the losses.
The outside markets were supportive with crude up almost $2 and the US$ down
almost 100pts, but it seemed to us that the corn market largely ignored the
outside markets and seems to want to go its own way.  A drop by that much in
the US$ would usually help push corn significantly higher, so I think this
just tells us that corn is going to have trouble rallying.  After the recent
drop in prices and the supportive trade in the outside markets yesterday,
the bulls have to be a little more nervous that corn didn't participate in a
rally yesterday.  The weather picture remains very good for crop development
with some wanting to talk about dry pockets developing, but I don't know if
anybody will get too excited because the extended forecasts have most of the
Midwest turning cool and wet into July.  If the weather pattern changes and
the hot/dry weather stay's longer than expected or if the long term forecast
changes to bring hot/dry weather back into the Midwest in July and August,
things could change and change quickly.  The volume was decent at 285,000
contracts and funds were buyers at 6,000 contracts.

Overnight, the corn market closed about unchanged, but near the high of the
night session.  Not too much to talk about in corn right now as we await the
USDA report next Tuesday and the July option expiration is Friday.  We will
start to see some position squaring in front of the report and we will see
the price of July futures float toward a certain option strike price on
Thursday or Friday.  We are starting to hear talk that maybe with the recent
weather improvement that the national yields are going to be closer to
trendline or better instead of a reduction that everybody wanted to talk
about a month ago.  There is no doubt that much of the ECB was planted late
and that usually leads to lower yields, but crops have really caught up the
last 2 weeks and depending on the weather during pollination, we could see
trendline yields.  The market also wants to talk about maybe we aren't going
to see a big or any reduction in corn acres.  Remember, in the March 31st
report, there was 5,000 missing acres from last year, so maybe we see an
increase in bean acres, but unchanged corn acres instead of a reduction.
Corn will be called to open unchanged and the outside markets are almost a
non-factor with crude down slightly, the US$ unchanged and stocks a little
higher.  I think is in a 2 sided trade until we get through option
expiration and the USDA report next week, then it is all about the weather
forecasts.

eCBOT Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN9                389^2    0^2                   389^2    384^4    1926

ZCU9                397^2    0^0                   397^4    393^0    1099

ZCZ9                 409^0    0^0                   409^2    404^6    3676

ZCH10              420^2    -0^2                  420^2    416^4    120

Early Opening Calls: mixed to lower

Top News

-- The US House of Representatives will vote on energy/climate-change bill
by Friday; agriculture interests have been threatening to withhold support
if the EPA did not change its stance on biofuels

-- 50 mil gal/yr Minnesota ethanol plant owned by Heron Lake BioEnergy
received new credit line from AgStar, allowing the company to continue
operating despite dwindling cash reserves and $9 million loss in the last
two fiscal quarters

-- Sen. Reed says over-the-counter derivatives that are securities related
should fall under the oversight of SEC, while all other over-the-counter
derivatives should be reviewed by CFTC

-- India's state meteorology agency sees a high probability to El Nino
conditions this year and that yearly monsoon rains would likely be below
average at 93% of the long term.

-- China Commerce Ministry spokesperson says the gov't will ask for a panel
of experts to be convened by the WTO to explore why US restrictions remain
for the import of Chinese poultry to the US.

-- With signs that US economic downturn is easing, the OECD - a group of the
30 largest industrial nations - increased their projections for 2009 & 2010
GDP.  They raised 2009 GDP to -4.1% from -4.3% and 2010 GDP to +0.7% from
+0.1% in their March forecast.

-- 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.

-- CME Group to begin Latin American Commercial Incentive Program in August
to help rally reduced cost electronic trading for Latin American Ag Products
on the CME & CBOT.

-- Dalian Jan Corn Futures down -5 Yuan to settle at 1,623 Yuan. ($1=6.83
Yuan)

-- LIFFE Aug Corn Futures unch at 138 euro/mt

-- eCBOT Corn Vol: 248,414; Pit Vol.: 23,507; Open Interest change: -121

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

-- Outside markets. Energy -0.25 to 68.99; Gold & Silver: up +11.1 to 935.4;
US $ Slightly stronger than the yen and euro

Cash Markets

-- CIF Corn  steady. June +44 to +46, July +47 to +49, Aug. +46 to +49,
Sept. +52 to +54, Oct. +46 to +48, Nov. +47 to +49, Dec. +49 to +52, Jan.
+42 to +44

TREND:

The corn has a short term negative bias looking for a test of 3.70 Apr lows.
Could not stem much of any rally at all today after trading lower early.
Look for more of a positive trade posture tomorrow---but upside seems
limited.

July wheat may be pricing in some business in soft white wheat. No reason to
be short but no reason to rally much? Spreads may have bottomed some today.
Lot of liquidation surfacing in bear spreads.



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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