Linn Group Morning Corn Comment

CHICAGO - May 29/12 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Friday as traders start to worry about the
hot/dry weather over the upcoming long weekend even though rains are
anticipated to fall across some of the northern areas and rains next week.
The July closed around unchanged, but the Sep was up about 8 cents and the
December was up about 6 cents, both near the highs of the session.  The corn
market was pretty quiet all session as we traded higher the whole session as
traders decided going short corn into a weekend when a weather forecast
change could push corn around 20 cents wasn't worth the risk.  The cash
basis levels have fallen in recent days which has put pressure on the old
crop and the bear spreading has become a trading feature.  These bull
spreads have been a big trade for many people and we are seeing liquidation
and actual new bear spreading pushing new pricing.  The volume was on the
light side at 261,000 contracts and funds were small buyers of about 6,000
contracts.

Overnight, the corn market started higher, then quickly sold off, only to
rally back higher on the day and that was just the first 15 minutes.  By the
time I woke up this morning, the corn market was lower as the trade seems to
feel the rains this week will provide the needed rains across most of the
Midwest.  The hot weather over the weekend has done some damage, but we are
still very early in the growing season and assuming your corn didn't just
fall over and die, the forecast says you will be rains this week.  The corn
market is still trading 2-4 lower at 9am so corn should open lower in the
pit.  It looks like the pit hours are going to change in reaction to the
extended trading hours for electronic trade.  The last version I have seen
is the pit will stay open until 2pm each day and open at 9:30 except on the
15 report days when it will open at 7:20 before the reports.

LaSalle Street News Top News

-- June 12th is tender bid deadline in a 100,000 mt optional origin Barley
tender floated by Jordan early this week, shipment is expected between LH
Aug to FH Oct, acc. to cash grain traders

-- Also on Monday, Japan Ag Ministry, announced results from an SBS tender
saying they bought a total of 27,450 mt of food and beer Barley

-- China's top ag official says with Chinese corn yields 35% below US
yields, there is plenty of area for improvement to help the country meet its
future needs without relying on imports

-- The ratio of Corn in Japan's livestock feed production fell to 44.3% in
March 2012, the lowest in the past 20 years and down from the 47.7% in March
2011, acc. to the ag ministry. Ratio for Wheat in livestock feed production
was up to 2.7%, the highest in 20 years.

-- 2012 winter and spring Barley yields are now seen by the EU Commission at
4.43 mt/ha that's up from April's estimate of 4.39 mt/ha

-- Gavilon will be purchased by Japan's Marubeni Corp for an estimated $3.6
bln and would jump to $5.5 bln with nearly $2.0 bln in included debt.
Marubeni officials say the purchase is a way for them to tap growing Chinese
demand and says it has no plans on selling any part of Gavilon at this time

-- Pending Tender:  Japan's Ag Ministry on Thursday also announced another
SBS tender to end on May 30th, they're seeking the usual volume of 200,000
mt feed barley and 120,000 mt feed wheat

-- Dalian corn futures for Sept delivery rose +4 yuan ending Tuesday's
session at 2,365 yuan/mt

-- CBOT Corn Volume & Open Interest for May 25th 2012 was 261,545; Open
interest decreased -17,367 to 1,169,048.

-- CBOT Ethanol Volume & Open Interest for May 25th 2012 was 1,472; Open
Interest increased +59 to 12,953.

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

-- Outside markets. Crude Oil up +23c @ $91.09; Gold up $4.00 @ $1572.90;
Silver off-15c @ 28.23; US $ index off -13 pts @ 82.38

LaSalle Street News Cash Markets

-- CIF Corn steady up 3.  May +70 to +73, June +76 to +79, FH July +70 to
+??, July +68 to +73, Aug. +90 to ++110, Sept. +65 to +70, OND +67 to +69

TREND:

Have to assume normalcy comes back to our markets at some point in this
liquidation game. We are taking yields down from optimum levels. We are
encouraging additional consumption of smaller crops. We know that some wheat
feeding ahs reverted back to corn. We also know that there is more China
demand here than has been reported?

Assume the market needs to add some weather risk back to prices. Lot of
technical resistance over the market but weather can cause a lot of that to
drop away? Not everyone agrees---if you trust your forecaster for the rains
coming this week to assume all the problems get solved, you can sell the
trade tonight!

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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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