Linn Group Morning Corn Comment

CHICAGO - Jul 6/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Thursday ahead of the long weekend as the
outside markets and good weather forecasts weighed on the market.  The
December contract closed down about 12 cents, making new lows at the end of
the day and closing right near the lows.  The crude oil was down about $2.50
and the US$ was higher which helped push corn lower.  The weather forecast
continues to be very conducive for good crop development as many areas that
have late planted corn are getting near perfect growing conditions.  The
current forecast has near normal temps and rainfall was scattered across
most of the Midwest.  A second heat wave is expected across parts of the
Midwest later this week, but it isn't expected to last very long and could
bring thunderstorms.  The weekly export sales were supportive, but it went
largely ignored.  The corn market is still trying digest the bearish crop
report on Tuesday and now traders will look to the Supply/Demand report on
Friday which we will likely to see adjustments to yields and stocks numbers.
The market feels that even with average yields, there is just too much corn
with the reduction in feed needs.  The funds sold about 10,000+ contracts on
Thursday and the volume was good at 285,000 contracts.

Overnight, the corn market took it on the chin again closing down about 10
cents as the weather pattern looks very conducive to crop development and
the crude oil is selling off again, down almost $3 this morning.  The US$ is
also stronger this morning which will weigh on grain exports.  The volume
was also unusually big over night with the December and September contracts
trading over 35,000 contracts.  The corn crop is in a free fall as the
current forecast calls for warmer temps the end of the week but it will
short lived and most of the areas have had good rains and more are expected
this week.  Technically, corn made new contract lows last night trading
below the lows it made back in early December.  There isn't really any
bullish news out there on corn right now and producers will unfortunately be
hoping for a weather scare to help support corn prices.  The demand for corn
isn't expected to get any better as much of the livestock industry in
trouble and lower feed prices will help, but these guys will not be making a
lot of money.  It will be an interesting day today as corn has made new lows
and will see if the December contract finds any support at the $3.50 level.
The demand for corn has almost disappeared on the break in the last week
which means either demand is that much worse than expected or they are
waiting to see how far prices are going to drop before starting to buy.
Supply/Demand report on Friday will probably see a yield adjustment and with
Informa estimating the yield at 3 bu higher than the last USDA estimate,
that will weigh on the market.  Corn will be called 8-10 lower and then we
will see if it finds any support.

eCBOT Overnight

Contract            Last      Net Change       High      Low      Volume

ZCN9                339^6    -6^0                  344^2    339^0    111

ZCU9                336^4    -9^2                  342^0    336^2    4317

ZCZ9                 347^4    -10^0                 353^2    347^0    12950

ZCH10              360^6    -10^2                 368^0    360^2    617

Early Opening Calls:

Top News

-- 24,000 mt of US Corn will be tendered for on July 8th by group in Israel,
they're also seeking 34,000 mt of feed products

-- EPA extends the public comment period on the proposed changes to the
Renewable Fuel Standards program to Sept 25, 2009 from the original end date
of July 27, 2009

-- Friday's Informa estimates US Corn yields at 156.3 bushels per acre
(bpa), compared to USDA at 153.4 bpa

-- Local crop analysts, UkrAgro, sees Ukraine Barley harvest as of July 2nd
at 1.91 mln mt.  They say yield is about 2.6 mt/ha

-- 08/09 marketing year Wheat exports from the Ukraine were pegged at 12.637
mln mt up from the prior MY fixed quota of 895,000 mt, acc. to private crop
forecaster UkrAgro.  They pegged Barley at 6.334 mln mt vs. 1.04 mln mt in
the prior year & corn exports at 5.51 mln mt vs. the prior year's 1.603 mln
mt

-- CBOT Corn Delivery: 0

-- Argentina animal health inspector data shows the country exported 203,392
mt of beef in the Jan 1 to end of May period, vs. last year's exports that
totaled 148,819 mt.  Russia was the lead export buyer of Argentine beef.

-- Texas, Illinois, Pennsylvania, & New Jersey will be allowed to resume
exports of live pigs & uncooked pork to Russia, after the country's animal
health agency lifted those restrictions

-- Dalian Jan Corn Futures down -17 Yuan to settle at 1,613 Yuan. ($1=6.83
Yuan)

-- LIFFE Nov Corn down -1.00 euro to 139 euro/mt

-- eCBOT Corn Vol: 263,296; Pit Vol.: 18,239; Open Interest change: -676

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

-- Outside markets. Energy -2.69 to 64.04; Gold & Silver: -9.5 to 921.5; US
$ Better than the Euro but slightly down to the Yen

Cash Markets

-- CIF Corn steady up 2.  July +44 to +46, LH July +48 to +51, Aug. +52 to
+54,  Sept. +59 to +61, Oct. +49 to +52, Nov.

 +50 to +55, Dec. +52 to +57, Jan. +43 to +??

TREND:

In typical wheat fashion, this market has broken 1.70 without much of a
correction for traders to sell into. It has literally left the trade in the
dust for 30 days. It remains the market with the weakest fundamentals. The
market is so oversold that it can have a short covering rally at any time
but that will be met with selling from all sectors. There is a strong chance
this market can take out the 4.55 lows on the weekly chart. There has not
been any new receipts delivered from the new delivery capacity in Chi. There
have been only token deliveries in KC. Both markets are developing quality
concerns that should cause deliveries---eventually. Hard wheat harvest in
Kan is leaving a lot of lower protein wheat that will lodge in delivery
space. Soft red wheat has a lot of lower test weight and some vomo issues
that will do the same. Chi spreads are already at full carry and beyond due
to the vomo changes in the Sep contract. But the KC U/Z is still not as wide
as it can go---use that opportunity to make sure short hedges are in the Sep
there.

Corn also has a fundamental weakness developing. The weather concerns can
prevent the market from taking out the 3.37 lows on the weekly chart but if
no problem develops this market can take aim on the 3.00 lows



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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