Linn Group Morning Corn Comment

CHICAGO - Jun 7/12 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was strong on Wednesday as traders build a weather premium
back into the corn market because of the lack of rainfall across most of the
Midwest.  The July contract closed up about 19 cents and the December closed
up about 12 cents, both right on the highs of the session.  The corn market
was trading higher overnight into the day session when more buying appeared
pushing corn up to new highs.  The market faded after making highs and
settled into a trading range.  Around mid-morning, the corn market moved
into new highs again before settling back.  The corn market firmed into the
pit closing and settled just off the highs.  The weather picture remains
perilous with the lack of rain, but there seems to be rains forecast for
next week, but forecasters seem to be reducing the rain totals everyday and
now there is talk of a ridge in the WCB.  The outside markets were
supportive with a lower US$ and higher crude and stock market.  We have seen
a break in many commodity markets, so it isn’t surprising to see a bounce
off these lows, but weather markets can be dangerous.  The volume was on the
light side at 278,000 contracts and funds were buyers of about 15,000
contracts.

Overnight, the corn market is stronger on a drier weather forecast that
emerged early this morning.  The July and December are trading about 5-7
higher.  The corn market was trading around unchanged until 4-5 am when the
new weather maps showed a bigger ridge across the WCB next week which will
limit rains and raise temps.  There is a rain event that is supposed to
happen early next week, but after that event, we dry out again.  These
weather markets can be very hard to trade, almost impossible to hold hedges
unless you have a lot of money.  The weekly export sales this morning were
on the light side, with very little detail.  China was a small buyer of old
and new crop, but nothing significant.  There was also news that China
lowered key interest rates which is positive for commodity markets. We have
seen such a break in the commodity markets over the last week or so that we
are bound to have a bounce, so traders are trying to figure out if this is a
bounce or a trend change.  Most farmers I talk to are happy with their corn,
but they need a rain.  The key the last week is that we haven’t had any
really hot weather to go with the lack of rain.  The corn is going to open
higher and more buying will probably appear as we get closer to the pit
opening.  The key today will probably be if we can find anybody willing to
sell corn into a weekend when a change in the forecast could push these
market significantly higher or lower.

LaSalle Street News Top News

**USDA Corn 11/12 Export Sales Net: 251,800 mln mt; 12/13 Net: 147,200 mln
mt; expected 425k-775k mt

-- Brazilian Ag Ministry foreign affairs officer expects to receive
paperwork back from Chinese officials soon, that would pave the way for
export shipments of grains, including Corn, to begin to China

-- USDA weekly data shows egg sets declined 2% in week ending June 2nd from
the year ago period; chicks placed fell -3.0% in the same period from the
year ago week

-- A cloture vote is expected mid-morning on the Senate version of the farm
bill; the House reportedly has a very different version of the bill, so the
debate will likely last quite a bit longer, acc. to analysts

-- Russian ag weather forecasters say rains over main growing regions in
late May likely halted damage to wheat crop and possibly even reversed some
damage.

-- Russian state ag weather forecasters say generally weather outlook should
remain favorable for harvest in the July-August period, but estimates 12/13
grain crop will be lower than last year's crop size

-- The UN's FAO said rising production potentials in a number of key
food/feed grains should continue to moderate food inflation; their food
price index in May was pegged at 204, down -4% from April

-- As reported last week, NASS has started gathering information about U.S.
crops and livestock through 3 simultaneous surveys focusing on agricultural
acreage, crops produced and stored, and hog inventory during the first 2
weeks of June

-- Private analyst Informa yesterday pegged Brazil Soybean crop at 66.4 mln
mt, estimates the Corn crop size at 67.5 mln mt;  they also estimate the
Argentine soybean crop at 60 mln mt and the corn crop at 20 mln mt

-- USDA attaché to China sees corn imports for the 12/13 MY rising to 7 mln
mt from the current marketing year's expected 5.5 mln mt on higher demand
from the livestock & industrial sectors in China

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

-- Dalian January corn futures overnight gained 7 yuan to end the session at
2,287 yuan/mt

-- CBOT Corn Volume & Open Interest for June 6th 2012 was 278,294; Open
interest increased +1,175 to 1,179,563.

-- CBOT Ethanol Volume & Open Interest for June 6th 2012 was 3,148; Open
Interest decreased -1,243 to 11,474.

-- Outside markets. Crude Oil up +$1.32 @ $86.34; Gold off -$8.0 @ $1626.40
; Silver up +2c @ $29.51 ; US $ index off -28 pts @ 82.09

LaSalle Street News Cash Markets

            Bean Barge   Corn Barge   SRW Barge   HRW Track    Ill Riv Frt

Jun     +66/68 N        +78/82 N        +22/26 N        +105/115 N   300

Jly       +71/73 K        +68/72 N        +42/50 N        +105/115 N   320

Aug     +77/90 Q        +105/115 U   +42/50 U        +100/104 U   425

Oct      +80/85 X        +65/68 Z        +55/60 Z        +102/110 Z    575

Truck  Beans            Corn   Wheat            Meal Hi-pro   Oil

Chicago         +5 N   +55 N +0 N

Toledo            -8 N    +35 N +5 N

Dec ILL          +25 N            +53 N              +3 N              -150
N

TREND:

The corn market posted solid gains today. The settle above 5.80 has this
market looking as if we may become more range bound, if we can hold today’s
move. Look for the market to settle into a 5.70 to 6.00 range, with a
possible run back to 6.30. Bull spreads continue to move off the lows made
last week.

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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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