Linn Group Morning Corn Comment

CHICAGO - Jan 15/10 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Thursday as we continued to see speculative
selling and fund liquidation.  The March and December contracts closed down
about 3 cents which was off the lows as we continued to see fund buying come
into the corn market at the end of the session that pushed corn higher.
Traders/analysts also pointed to the weaker than expected export sales that
shows that demand is still anemic and with burdensome supplies, it points to
lower corn prices.  The early weakness in corn and beans was supported,
probably more by the expected fund buying at the end of the day than traders
feeling that corn has found value.  Technically, corn has done a lot of
damage this week and this should signify a top in the corn market unless we
have a major fundamental change.  The bulls are pointing to a battle for
acres this spring, but with the likely increase in corn acres this year
because of lower wheat acres, this may not happen to a big extent.  With the
warmer weather across most of the Midwest, traders/analysts are expecting to
see some harvest progress this weekend.  There were rumors out of Goldman
Sachs yesterday during the session that they were telling clients to
liquidate long corn positions which also weighed on the markets.  The volume
was good at 248,000 contracts and funds were sellers of about 10,000
contracts.

Overnight, corn was lower again with the March and December closing down
about 2-3 cents on a tight trading range of only 3-4 cents.  The corn market
remains under pressure because of the USDA report on Tuesday, but it isn't
finding aggressive selling because of the expected fund rebalancing and
buying that is supposed to end today.  The number of contracts was smaller
yesterday as compared to earlier in the week and it is expected to be even
smaller today, the last day.  The USDA this morning announced sales of 112
mt to unknown destinations and we will probably see the export sales pick up
with the lower prices.  The USDA also announced that So. Korea bot 8-9
cargoes of US corn yesterday afternoon for delivery in March-May.   Corn is
on track to have the worst weekly performance and some traders/analysts feel
that corn has to go lower to try and convince farmers they need to plant
beans instead of corn.  The corn market will be called lower this morning
and there isn't really any positive news that should push corn higher unless
we see some profit taking after the big sell off this week.  After the big
drop this week, it will be interesting to see if they can push corn into new
lows.  Today is the last day of fund rebalancing for corn only, so we might
see the support like we have seen the last 5 days in the grains.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH10              378^6    -2^2                  379^6    376^4    8316

ZCK10              389^6    -2^0                  390^4    387^4    1489

ZCN10              399^2    -1^6                  399^4    397^0    1549

ZCU10              405^2    -3^0                  407^0    405^0    167

Early Opening Calls: off 2-3 cents

Top News

**USDA reports private sale of 116,000 mt of US Corn sold to Unknown
destination for the 09/10 MY

-- Under SBS tender rules Japan's Ag Ministry on Friday Jan 15 purchased
5,600 mt of food grade Barley

-- Buenos Aires Grain Exchange in its weekly crop report says 09/10 Soybean
crop is nearly finished at 98% complete, but behind long term average of
fully complete.

-- Buenos Aires Grain Exchange in its weekly crop report says 09/10 corn
crop is nearly finished at 97% complete.

-- Merchandisers says 9 cargo shipments of US Corn have been bought by
importers in S Korea, the grain is for delivery between late March to June.
Traders say the cargos were bought for prices between $230-$240/mt

-- Ethanol margins remain around 20 cents/gal, unable to take advantage of
the break in corn futures, as rising corn basis, declining DDG prices, and
subsequent declines in ethanol futures have cut into potential gains

-- The Ethanol vs. RBOB Gasoline spread is testing Oct 2009 lows after the
late Dec, early Jan resurgence of the energy complex; ethanol is currently
trading at a 27 cent discount to gasoline, which should promote active
blender interest

-- The Census Bureau reported November biodiesel production at 66 million
gallons, 22% higher than Oct, but 7% less than Nov 2008; soy oil biodiesel
accounted for 47% of total Nov production

-- Sugar trade groups in Brazil lent their support to the government
decision to lower anhydrous ethanol blend rates from 25% to 20%, after the
government attached a 3 month timetable to the measure.  The sugarcane
situation remains very tight in Brazil; the reduction in blending will
reduce ethanol use by about 1 mil gal/day & E-95 use should also decline as
consumer ethanol prices in Brazil soar.

-- California's state law office approved the Air Resource Board's
Low-Carbon Fuels Standard, which applies specific greenhouse gas
measurements to different types of fuel, including region-specific ethanol.
Ethanol groups have protested the measure, filing a series of lawsuits and
petitions, as the CARB legislation severely penalizes transportation of
fuels; analysts believe it could potentially eliminate Midwest ethanol from
being blended into the state's motor fuel supply

-- Top executive at Mosaic, says some fertilizer market participants are
looking to buy product in spot market deals instead of longer term contracts

-- Bunge discusses with Vale sale of Bunge's stake in Brazilian fertilizer
firm Fosfertil

-- Pending Tender: Niger to receive 4,550 mt of US Sorghum via CCC tender
scheduled to close on Jan 19th

-- Pending Tender: Jan 12 bid deadline set for Taiwan feed industry group's
40-60,000 mt Corn tender.  Traders say they're seeking corn from Brazil or
the US with shipment during March

-- Pending Tender: 100,000 mt of Barley is being sought in a Jan 20th tender
floated by Jordan's state run grain buyer with delivery expected in the
Mar/Apr period

-- Pending Tender: 100,000 mt any origin feed grade Barley tender was
floated on Thursday by Jordan's state run grain buyer, bids are due by Jan
20 and shipment is for LH Mar/FH Apr

-- Dalian corn futures were mixed, nearby contracts were -3 to +3, while the
benchmark Sep contract backed off -4 yuan to 1,893 yuan/mt

-- Liffe March corn futures were off -1.25 euro at 136.5 euros/mt.

-- Globex Corn Vol: 206,498; Pit Vol.: 30,077; Open Interest change: + 1,885

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

-- Outside markets: Energy Complex -0.61 at $78.78; Gold & Silver: -9.5 at
$1133.5 & -0.090 at $18.565; US $ +0.485 at $77.370

Cash Markets

-- CIF Corn steady up 2.  Jan. +43 to +44, Feb. +45 to +46 , Mar. +46 to
+48, April +39 to +40, May +39 to +40, June +39 to +40, July +39 to +40,
Oct. +39 to +42

TREND:

The trade is starting to believe the market will not be able to bounce much.
And there appears to some farmers stuck with cash corn and the trading funds
remain long 140 thou corn contracts and over 35 thou bean contracts. Look
for some serious soul searching to take place as this market closes near the
lows for the week if not making new ones. If we close as weak as expected on
Fri of this week, it sets up a big bad bear trade for next week.

Corn continues the market with the largest exposure so has the biggest risk
to the down side.

Futures trading involves substantial risk of loss and is not suitable for
all investors. Past performance is not necessarily indicative of future
trading results. Trading commentary and analysis is based on information
taken from trade and statistical services, news services, and other sources
which we believe to be reliable. We do NOT warrant that such information is
accurate or complete, and it should NOT be relied upon as such. Our policy
is to publish market research that is objective, clear, fair, and not
misleading. Trading commentary and analysis reflects our good faith judgment
at a specific time and is subject to change without notice. There is no
assurance that the advice we give will result in profitable trades. All
trading decisions will be made on a strictly unsolicited basis by the
account holder.



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/

DISCLAIMER: Futures and options trading involve substantial risk. The valuation of futures and options may fluctuate, and as a result, clients may lose more then their original investment. In no event should the content of this website be construed as an express of an implied promise, guarantee or implication by of from the Linn Group, Inc. that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Information on this page is derived from third parties and is deemed to be reliable. STAT Communications Ltd. accepts no responsibility for errors, omissions or inaccuracies in any of the material presented on this web site. Opinions expressed on this web site are those of the respective individuals and/or institutions and do not represent the opinions of STAT Communications Ltd. or its management.