Linn Group Morning Corn Comment

CHICAGO - Nov 19/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed lower on Wednesday as the early gains weren’t
supported after taking out recent highs and all the grain markets closed
lower.  The December corn closed down about 4 cents which was right on the
lows and about 11 cents off the highs.  The market was higher right from the
opening and held onto the early gains for the first 2 hours of the session
before going lower on the day and never really recovering much.  With
December option expiration on Friday, there is a lot of speculating that we
are seeing some jockeying among option players right now.  The December corn
option is usually the biggest option expiration for the corn contract, so it
can see a lot of volume and/or jockeying.  The $4 strike price has the most
open interest, so if the market gets too far away from that strike price
before the close tomorrow, we could see some extended moves.  The weather
remains the same with rains across parts of the Midwest, but as one farmer
told me, at this time of the year, unless it is really raining or we can’t
get into the fields, we just keep plugging along.  We continue to hear about
issues with crop quality, but this seems to be in limited areas and not
across the whole country and it is keeping the corn market nervous.  The
volume was good at 259,000 and funds were sellers of about 7,000+ contracts.

Overnight, the corn market continued to go lower following the late day
break yesterday.  The corn market closed down about 6 cents near the lows of
the night session.  The outside markets provided some pressure this morning
with the US$ higher and stocks and crude lower, but it looks like the corn
market is under harvest pressure and the funds weren’t here to support it.
Weekly export sales this morning were a little smaller than the market was
expecting.  The market was expecting export sales of 400-500K and actual
sales were 353K.  I don’t know how much effect this will have on the corn
market as many are not really watching export sales unless we see something
out of China.  It will be interesting today to see the corn market finds any
buyers now that it has sold off the highs early in the day yesterday.  We
didn’t see any fund support yesterday, so we will see today.  With the lack
of quality and the wet crop coming out of the field, we are seeing a lot of
corn being sold into the market right out of the field, so that is creating
pressure we haven’t seen in the past because of so much on farm storage
today.  The opening call this morning will be inline with the overnight
calls down about 4-6 cents and then it will look for support.  Keep an eye
on the open interest in different strike prices for price direction, right
now, $4 strike seems to be the key.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ9                 392^4    -5^4                  399^4    390^0    8646

ZCH10              408^0    -5^6                  415^2    405^4    4134

ZCK10              417^6    -5^6                  424^6    416^0    1246

ZCN10              425^2    -5^4                  432^2    423^0    707

Early Opening Calls: off 3-5 cents

Top News

**USDA reports private sale of 116,000 mt of US Soybeans to China for the
09/10 MY

**USDA Corn 09/10 Export Sales Net: 352,900 mt; 10/11 Net: NONE mt; expected
400k-500k mt

-- Merchandisers report 35,000 mt of Corn & 20,000 mt of Sorghum were bought
by private group in Israel on Thursday

-- Alberta ag dept weekly report shows overall grain & oilseed harvest for
all types is 98% complete.

-- Poet LLC has reduced its cellulosic ethanol production cost to $2.35 per
gallon from $4.13 this past year. Poet was able to cut cost through reducing
energy usage, capital expenses, enzyme costs and raw material requirements.
The company plans to produce 25 million gallons of ethanol each year from
plant waste.

-- ETH Bioenergia & Brenco may finalize merger talks by December - the
combined company would create the largest ethanol producer in Brazil, with
the capacity to crush 37 million metric tons of cane per year, acc. to a
Bloomberg News report

-- GTL Resources, which operates a 100 mil gal/yr plant in Illinois,
reported a pre-tax profit of $2.5 mil over the last six months, compared to
a $5.9 million loss last year, as margins improve and the company's
production increases

-- Glacial Lakes Energy, which operates a 55 mil gal/yr plant in MN,
investing $2.8 million to install new dryers and on-site storage, which will
enable them to handle 25% moisture corn, from 16.5% limits currently

-- Pending Tender: Japan's Ag Ministry also announced 100,000 mt SBS feed
Barley tender, with bids due by Nov 18th

-- Liffe Jan corn futures were off -1.75 euro at 134.50 euros/mt.

-- Dalian exchange Corn futures for May delivery were 5 higher at 1,767
yuan/mt, most other months were 2 to 7 yuan higher

-- Globex Corn Vol: 226,139; Pit Vol.: 21,626; Open Interest change: - 5,300

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

-- Outside markets: Energy Complex -0.56 at $79.02; Gold & Silver: -3.2 at
$1138.0 & -0.035 at $18.380; US $ +0.260 at $75.525

Cash Markets

-- CIF Corn steady off 1:  Nov. +45 to +47, Dec. +48 to +50, Jan. +38 to
+40, Feb. +40 to +42 ,Mar. +40 to +42, April +40 to +42, May +37 to +40,
June +37 to +40, July +37 to +40

TREND:

We continue to have a choppy s/t trade in the corn market as December
stalled near the $4.10 area. This should force another s/t break with
support in the $3.92 to $3.90 area. Look for buying there. Right now, we
still have a trading range of $3.90 to $4.10. The October highs at $4.13 ½
are the key to a new bull wave here.  Note that March tested its October
high at $4.24 ½ and slowed as well. However, this pattern shows potential
for another upswing. Expect the $4.00 to$4.05 area to offer support. Look to
buy breaks there.

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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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