Linn Group Morning Soybean Comment

CHICAGO - Jul 16/09 - SNS -- Following is the morning soybean futures comment from the futures commission brokerage firm Linn Group.

The soybean market closed lower on Wednesday reversing the higher opening
and rally early in the session.  With the weaker US$, stronger crude and
equity markets, the grains opened higher, especially soybeans, but it
couldn't hold the gains and despite the supportive outside markets and
fundamental news, soybeans sold off aggressively.  The August and November
contracts were about 30 and 20 higher, respectively, early in the session
but they closed about 14 lower on the day.  It seemed that once some upside
objectives were met, the market looked at the good weather forecast and
decided to take early profits and sell the markets as there just wasn't
anybody to buy the market the last hour or so.  We got news early in the day
that China had bot another 2 cargoes of US beans and that helped support the
market, but as traders looked at the weather, they decided it was time to
cover longs.  After the reversal in the middle of the day, technical selling
came into the market and funds continued to sell into the close.  On the
product side, meal followed beans lower, but oil was able to remain positive
and hold the early gains to actually close higher on the day.  The volume
was about 132,000 contracts and funds were sellers of about 3,000+ at the
end of the session.

Overnight, the soybean market continued the slide that started yesterday
during the middle of the trading session.  The August closed down about 25
cents and the November was down about 15 cents which is about 8-10 cents off
the lows from the night session.  The soybean market opened unchanged,
slightly higher overnight and traded at those levels most of the night
before starting to break down in the middle of the night and then making new
lows around 4:30-5am.  I don't see much changes in the weather maps this
morning, but the timing of the break last night coincides with the release
of new weather maps.  The bottom line for grains right now is that except
for maybe cooler than normal temps, the weather is almost ideal for crop
development and most of the Midwest is expected to get some rain over the
next 2 weeks.  Temps are going to be cooler than normal but the current
forecast does have 2 warm ups for brief periods of time over the next 2
weeks.  The export sales this morning were within expectations.  The market
was expecting 500-750,000 and actual sales were 684,700.  There was some
talk last night that we could see some surprises this morning, but the sales
are within expectations.  The call this morning will be inline with the
close last night and now we will see if the market finds any buying on this
break or do we find selling on the down market.

eCBOT Overnight

Contract            Last      Net Change       High      Low      Volume

ZSQ9                995^0    -25^4                 1029^0  989^6    2397

ZSU9                928^0    -22^4                 955^0    923^6    199

ZSX9                 889^4    -15^0                 913^0    882^6    6695

ZSF10               898^0    -14^2                 919^4    891^0    106

ZSH10              899^6    -16^4                 918^4    899^0    20

ZMQ9               320.6    -5.8                   329.5    318.1    976

ZMU9                296.5    -5.9                   305.6    295.1    168

ZMV9                278.4    -2.6                   280.0    277.0    44

ZLQ9                33.44    -0.68                 34.25    33.35    1786

ZLU9                 33.55    -0.73                 34.40    33.54    569

ZLV9                 34.45
0

Early Opening Calls: 15-20 lower

Top News

**USDA Soybeans 08/09 Export Sales Net: 134,200 mt; 09/10 Net: 550,500 mt;
expected 500-750k mt

**USDA Soybean Meal 08/09 Export Sales Net: 62,600 mt; 09/10 Export Sales
Net: 4,300 mt; expected 50-150k mt

**USDA Soybean Oil 08/09 Export Sales Net: 48,100 mt; 09/10 Export Sales
Net: 42,000 mt; expected 20-35k mt

-- Chinese gov't will sell 500,000 mt of gov't stockpiled soybeans next week
for $549/mt, while stockpiled Corn sales would initially cover 2 mln mt of
reserves

-- Farms commissioner in India says progress in oilseed planting is
progressing normally, says cotton acreage will rise by 700,000 ha over yr
ago figures, but rice sowing is a bit problematic in some areas

-- Dalian Jan Soybean futures fell -18 Yuan to 3,529 Yuan/mt; Jan Meal
dropped -22 Yuan to 2,791 Yuan/mt; Jan Soy Oil down -12 Yuan to 7,032
Yuan/mt ($1=6.83 Yuan)

-- Malaysian Palm Oil fell -65 ringgit to 2,020 ringgit/mt

-- LIFFE Aug Rapeseed futures down -6.00 euro to 273.5 euro/mt

-- eCBOT Soybean Vol. 118,381; Pit Vol. 12,381; Open Interest Change: +5,391

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

-- Outside markets. Energy down -0.69 to 60.85; Gold & Silver: down -1.2 to
938.2; US $ Stronger than both the Euro and the Yen

Cash Markets

-- CIF Soybeans steady old, off 1 new. July +95Q to +105Q, FH Aug. +80 to
+95 Aug. +65 to +75,  Sept. +100 to +105, Oct.

 +70 to +75, Nov. +70 to +74, Dec. +69 to  +74, Jan. +69 to +74

TREND:

Have to say that the weakness in the $US remained into the close. It appears
to be making a move out of recent congestion zone or flag pattern and would
suggest another leg to the down side. This will affect primarily commodities
that are largely traded into export. Certainly friendly to energy markets
along with gold and other precious metals. This could parlay into a more
positive outlook for grains but after the actions today suggest this will
not be popular line of conversation for a few days?

Do not want to press beans at this point either---the reversal back down
today is ugly but right back into support. Do not want to see the market
leave the close and trade lower all day tomorrow so have to react if it
does. Suspect there can be some surprises in the sales report in the AM.
Commercials may already know it but public could be surprised.

Oil continued to gain on meal all day.big spread trade came on weakness in
meal. Starting to build some momentum but it can be a very rocky road just
like today---lost $3-400 on the meal rally early only to give it back late.



To discuss this report further or for specific trade ideas please contact me
directly

Nathan T. Smith III
Linn Group
nsmith@linngroup.com
toll free: (877) 787-6278
local: (312) 896-2090
fax: (312) 896-2050
www.linngroup.com/

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