Linn Group Morning Corn Comment

CHICAGO - Jun 22/12 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Thursday as the outside markets were
significantly lower and that seemed to pull all the commodity markets lower.
On top of the outside markets, it rained on LaSalle Street which as the myth
goes, had grain traders at the CBOT selling grain.  The July contract led
markets lower closing around 25 lower and the December closed down about 16
cents lower both near the lows of the session.  On top of the outside
markets, the rains that came across IA overnight, stopped at the IA/IL
border, but did redevelop later that morning.  While the radar looked good,
when you talked to farmers on the ground, they said it was barely raining
with some guys giving me rain totals in the number of drops on their
windows.  It seemed to be more fund liquidation because of the higher US$
and lower crude prices affecting grains.  We are starting to see analysts
lower yield estimates with Cropcast lowering their estimate from 163.7 to
158.6.  I would say in talking to traders and analysts, the market is
trading a 158-159 yield right now.  The ECB is still without any relief for
the dry weather and while temperatures will moderate, no rain is in the
forecast.  The volume was big at 437,000 contracts and funds were sellers of
about 20,000 contracts.

Overnight, the corn market is higher, taking back most of the losses from
yesterday as the rains were very disappointing across the ECB as the radar
seemed to show good rains yesterday, but the ground readings just didn't
show anything.  As of 8:30, the Dec was trading about 16 higher and the July
was about 12 higher.  Today is July option expiration and the $6 strike
price has the most volume and futures are right back up to that price.  The
current forecast doesn't have any rain in the ECB except for a few light
chances, so the corn will continue to be under stress.  The only savior is
the hot weather seems to be out of the forecast for at least the next week.
The early planted corn will start to tassel in the next 2 weeks and without
any significant rains, the yields will be down dramatically.  It seems like
southern IL, most of the state of IN, and NW OH are the worst off.  The corn
market should remain strong today unless the forecast changes dramatically
which will point us to the highest close in December since the middle of
March.  Watch out today, but the market may put extra weather premium in the
market because we saw a lot of long positions covered yesterday.

LaSalle Street News Top News

-- Group in Israel also bought 5,000 mt of feed Barley for a reported
$271/mt cif and was also thought to be of Black Sea origin, acc. to traders

-- Cash traders say more than 45,000 mt of Brazilian Corn was bought in a
tender on Friday by group in Israel, reportedly paying 89.5 cents over Sept
CBOT futures contract

-- Corn rations in Japanese feed during April fell to 43.9% from the year
ago month's 46.5%, a 20 year low ratio for the country, acc. to the Japanese
Ag Ministry

-- Argentina's gov't kept their 2011/12 corn crop harvest size at 20.1 mln
mt the same as May's estimate

-- Buenos Aires Grain Exchange pegged Argentina Corn harvest at 72.0%
complete, farmers have collected 12.43 mln mt so far.  This week's harvest
estimate compares to last week's 67.4% harvested and 11.45 mln mt collected

-- Argentina's gov't also lowered their 11/12 soybean harvest estimate by
800,000 mt to 40.3 mln mt

-- Buenos Aires Grain Exchange Thursday pegged Argentina Soy harvest at
98.6% complete, farmers have collected 39.3 mln mt so far.  This week's
harvest estimate compares to last week's 96.8% harvested and 38.67 mln mt
collected

-- S Africa's grain council estimated 11/12 closing Corn stocks at 994,000
mt down sharply from the prior season's 2.33 mln mt; forecasts opening corn
stocks for the 12/13 MY at 2.86 mln mt

-- S African grain info service also estimated total 11/12 corn exports at
2.57 mln mt up from the prior marketing year's 2.19 mln mt

-- Cropcast lowers their 2012 US soybean yield to 42.4 bushels per acre on
dryness

-- Cropcast lowers their US 2012 corn yield forecast to 158.6 bushels per
acre on dryness

-- Saskatchewan weekly crop report says excessive moisture and lack of warm
weather, has crop development ranging from normal to behind normal,
depending on the area. Most crops that have emerged are in good to fair
condition

-- Saskatchewan weekly crop report shows topsoil moisture on cropland is
rated as 48% surplus and 52% adequate; excess moisture is delaying in-crop
pest control applications for most producers in the province. There have
been reports of hail damage and localized flooding in some areas.

-- Saskatchewan weekly crop report shows 98% of the 2012 crop has been
seeded compared to the 82% seed at this time last year, the 5 yr average is
91% seeded

-- Weekly EU data shows 100,000 mt of corn was granted export licenses this
week bringing the season to date total to 2.99 mln mt

-- Ukraine Ag Ministry on Thursday reported 2012 harvest has begun with
180,000 mt taken from 110,000 ha as of June 21st.  The harvest so far has
consisted of 129k mt of barley, 45k mt of wheat and 6k mt of peas.

-- Trucking industry sources in Argentina say the country's truck drivers
union reached a wage deal with employers on Thursday

-- Analysts expect Friday's USDA cold storage report to show total pork
stocks as of May 31 around 643.0 mln lbs, total beef stocks around 521.5 mln
lbs and pork belly stocks around 70.5 mln lbs.  The report will be released
at 2:00 pm CDT, June 22.

-- India's state run weather bureau forecasts 2012 monsoon as average with
rains seen at 96% of the long term average, expects during July rains will
be 98% of the long term average

-- US Senate Thursday approved farm bill for next 5 years that increases
crop insurance but overhauls other subsidies

-- 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

-- Pending Tender:  The Japanese AG Ministry also announced another new SBS
tender to close on June 27th, where they're seeking 200,000 mt of feed
Barley & 120,000 mt of feed Wheat for shipment by Sept 30

-- Pending Tender:  Japanese Ag Ministry announced they're seeking total of
47,000 mt of Barley in a June 29th SBS tender, the 41,000 mt food barley and
5,000 mt beer barley is shipment by Sept 30

-- China's financial and commodity markets were closed for holiday on Friday

-- CBOT Corn Volume & Open Interest for June 21st 2012 was 437,468; Open
interest decreased -17,980 to 1,100,540.

-- CBOT Ethanol Volume & Open Interest for June 21st 2012 was 1,658; Open
Interest increased +118 to 10,503.

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

-- Outside markets. Crude Oil up +9c @ $78.29; Gold up +$3.50 @ $1569.00 ;
Silver off -6.4c @ $26.77 ; US $ index up +8 pts @ 82.57

LaSalle Street News Cash Markets

-- CIF Corn steady off 7.  June +74 to +81, FH July +72 to +82, July +56 to
+61, Aug. +?? to +90 , Sept. +?? to +70, O/N/D +62 to +63

TREND:

For the second consecutive day Dec corn has tested the support level at 5.50
and held. When values traded above this level earlier in the week it was the
catalyst to the move near 5.70. Upside counts still project to 5.87. If we
are to get further weakness tomorrow, the 5.40 level will be key. A settle
below Tuesday's lows will change the dynamic of this market.

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If you have any questions or want to discuss specific trade recommendations,
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Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com
www.linngroup.com/

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