Linn Group Morning Corn Comment

CHICAGO - Jul 3/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market consolidated yesterday some as it was probably oversold
after the limit down day on Tuesday and we had fund buying yesterday as the
index funds were prohibited from buying on the limit down day on Tuesday.
The December contract closed up about 2 cents after making the highs early
in the session and selling off in the middle of the day and then rallying on
fund buying.  The soybean market was strong on the opening and helped pull
the corn market higher early in the session, but it just couldn't the gains.
The outside markets were supportive early with crude higher and the US$
lower, but crude faded later in the day with the corn market.  With the corn
market probably oversold after the limit down move, it was due for a bounce,
but the upside is limited because of the much higher acreage number, the
excellent weather conditions, and the weak domestic feed demand.  There was
also talk in the market that China would release corn from its reserves
possibly next week to ease prices in the northern China as prices have
gotten tight.  The funds were net short on the day, but that was mostly
because we saw significant index fund buying on the close as they couldn't
buy corn on Tuesday.  The volume was strong at 320,000 contracts.

Overnight, corn traded mostly lower overnight closing down about 6 cents
near the lows of the night session.  There is nothing positive about corn
right now and the market knows it and it will sell any rally until something
changes.  The weekly export sales this morning were good, but as we have
seen, weekly export sales have gone largely ignored.  There is no new news
on the corn market right now, so traders/analysts will look at old
information for trading guidance.  Almost all the news is negative for corn
right now as bulls hold on to the hope of weather stress later this summer
during pollination will reduce yields.  A producers worst nightmare is high
yields on top of bigger acres.  The 87 mil acres is probably too big, but it
is now the base line for acreage discussions the rest of the summer and will
probably go lower, but probably not 3-4 mil acres taking acres down to a
reasonable number to keep prices higher.  The weather is the main focus for
traders now that the crop report is behind us.  We have a 3 day weekend and
we could see some further selling today as the weather pattern looks non
threatening.  Corn will be called lower this morning, the outside markets
are negative, but if soybeans gain some strength, it could pull corn higher.

 eCBOT Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN9                345^4    -6^2                  352^4    345^2    308

ZCU9                350^0    -6^4                  357^0    349^6    2698

ZCZ9                 363^4    -5^6                  369^6    362^4    5759

ZCH10              377^6    -4^6                  383^0    376^4    455

Early Opening Calls: 3-4 lower

Top News

**USDA reports private sale of 152,400 mt of US Corn to unknown destination
for the 09/10 MY

**USDA Corn 08/09 Export Sales Net: 1.155 mln mt; 09/10 Net: 117,000 mt;
expected 500-800k mt

-- 55,000 mt of US Corn was sold to S Korea feed millers on Thursday for a
reported price of $216.90/mt, acc. to merchandisers

-- Buenos Aires Grain Exchange weekly report leaves the 08/09 Argentine Corn
production figure at 12.5 mln mt unchanged from the prior reports

-- Hungarian ag official says that country's corn crop is expected to be
around the 8.5 mln mt mark

-- Poultry industry group in the US said Chinese gov't has been sending
signals that it will stop issuing import certificates for US poultry.  The
US group says its in retaliation for the US gov't denial to import Chinese
poultry.  China imported $372 mln worth of US chicken last year

-- Ukraine Ag Ministry plans on buying in the first 3 months of its
marketing year nearly 1.5 mln mt of grain.  Their crop marketing year begins
in July & has set aside $150 mln to make the purchases

-- German based grain trading firm, Toepfer, says the country's 2009 grain
harvest will be in a range of 46.5 to 47.5 mln mt down from last year's 50
mln mt haul.  Its Wheat harvest is expected in a range of 24 to 25 mln mt

-- Average daily volume during June at the CME Group was 11.4 mln contracts,
but that figure is down 20% from the year ago month, total June volume was
251,000,000 contracts

-- Dalian Jan Corn futures up +4 Yuan to 1,631 Yuan. ($1=6.83 Yuan)

-- LIFFE Nov Corn futures Unch at 139 euro/mt

-- eCBOT Corn Vol: 276,267; Pit Vol.: 39,595; Open Interest change: -1,008

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

-- Outside markets: Energy complex -1.67 to 67.64; Gold & Silver -11.7 to
929.6; US $ Slightly stronger than the euro and weaker against the Yen

Cash Markets

-- CIF Corn steady.  July +44 to +46, LH July +46 to +48, Aug. +50 to +53,
Sept. +58 to +61, Oct. +49 to +51, Nov. +50

to +52, Dec. +52 to +57, Jan. +42 to +??

TREND:

Corn and wheat have definitely damaged the outlook---so let's start from
scratch.

Corn rallies will be limited. The down side may not be done. Weekly chart
says we could take the market all the way to $3.00. Use weather related
rallies to step up marketing for producers. Users have to do what is
economical. Scaled down buying if needed---but should get lots of chances.
New crop spreads will tend to remain under pressure but not sure that there
is enough to be bear spread unless we get a correction due to weather?



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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