Linn Group Morning Corn Comment

CHICAGO - Jun 26/12 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed limit up in the first 4 months as the hot/dry weather
seems to intensify later this week and there isn’t really any rain in the
forecast through the 4th of July for the driest areas of the ECB.  The
December opened about 20 higher on Sunday night and it never really gave
anybody a chance to buy a pullback as the market kept moving higher.  The
December went limit up early in the day session and then set back about 6
cents before moving back to limit up where it stayed the rest of the day.
The December continued to trade at limit up, but the September traded on and
off limit most of the day until the final hour or so.  By the close, the
first 4 months were all limit up with the December closing about 3 cents
higher synthetically.  The key for everything is the weather and it is going
to very tough on the corn market in the driest areas as the rain is going to
very light if it falls as all.  There is no generalized rains, it is all
scattered, isolated thunderstorms which may bring rain, but it will be very
limited.  The southern part of IL and most of IN are in deep trouble and
some of the corn is starting to pollinate and without rain, they won’t get
much of a crop.  The volume was high at 394,000 contracts and funds were
buyers of about 25,000 contracts.

Overnight, the corn market started about 6 higher and quickly traded about
10 higher and then settled into a range overnight.  The corn market was
trading about 5 higher at 7am, but quickly new buying came into the market
around 8am and pushed corn up to new highs with the December trading as much
as 20 higher.  I didn’t see an exact reason for the move at that time, but
with the new trading hours, we are seeing volume pick up before 9:30 as
traders make their way to the office.  The crop condition report was
released after the close yesterday and it showed good to excellent down
about 7% which was lower than the expected 2-3% decline.  We saw major
reductions in IN and IL, off 12% and 9% respectively.  These are two of the
biggest corn producing states, so a reduction in corn yields in these states
carry a lot of weight because of the number of acres planted.  The corn is
ahead of schedule this year because of the early planting, so the heat this
early in the season couldn’t be coming at a worse time for many farmers.
The corn market is now moving higher again and traders need to be careful
because these weather markets can blow up, like limit up for a couple of
days in a row.  We have expanded limits today, with the new limit at 60
cents in corn, so it could be a crazy day.

GLOBEX Snapshot

Contract         Last     Net Change  High   Low     Volume

ZCN12                       639     8                      642.5  629.5
7389

ZCU12                       602.5  11.25              606.75
592.75            13283

ZCZ12                        606     12                    610.75
596.25            44236

ZCH13                       617     12                    620     606.25
2755

LaSalle Street News Top News

-- Monday's USDA crop progress report put US corn silking at 10% compared to
last year's 2% and 3% long term average.  IL silking was 17% along, IN 9%,
KS 26%, NE 5%, and IA 2%

-- Monday's USDA corn conditions were 14% vp-poor; 30% fair; 56%
good-excellent compared to last week's 9% vp-poor; 28% fair; 63%
good-excellent

-- Traders note both CBOT Corn & Oat futures are trading at expanded limits
- corn at 60 cents, oats at 30 cents; July Oats are currently limit bid on
155 contracts traded

-- Grain analysts say the 7% lower Corn rating was more than the expected 2%
to 3% decline the trade was expecting, but the lowest Corn rating for this
week came in 1988 at 26% good to excellent.

-- China’s Premier has told Argentine officials that China is interested in
buying Corn from Argentina, but industry sources say there is still
uncertainty around importing some GMO corn types that Argentina grows.

-- Analysts collectively expect Friday's USDA acreage report to show Corn
acreage at 96.1 mln acres that would be 0.2 mln acres ahead of the end of
March USDA estimate

-- Ahead of Friday's USDA stocks estimate analysts are forecasting US corn
stockpiles at 3.18 bln bu compared to the year ago month's 3.67 bln bu;
soybean stocks are seen at 640 mln bu that would be 21 mln bu ahead of the
year ago month

-- Cordonnier lowered US Corn yield this week by 3 bushels per acre to 156
bpa and lowered US Soybean yield to 42.0 bpa down ½ bu. from last week.

-- Analysts at Macquarie Group estimate US corn yields at 156.5 bpa, which
is much lower than current USDA projections of 166 bpa, on drought in the
Eastern Corn Belt

-- 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

-- Dalian Jan. corn futures rose +4 yuan on Tuesday ending the session at
2,348 yuan/mt

-- CBOT Corn Volume & Open Interest for June 25th 2012 was 394,105; Open
interest decreased -4,924 to 1,077,347.

-- CBOT Ethanol Volume & Open Interest for June 25th 2012 was 1,750; Open
Interest increased +41 to 10,458.

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

-- Aussie weather bureau says Pacific Ocean surface temps around the equator
continue to warm pointing toward a rise in the probability for an El Nino
even developing

-- Outside markets. Crude Oil off -22c @ $78.99; Gold off -$8.20 @ $1580.20
; Silver off -32c @ $27.19 ; US $ index up +8 pts @ 82.75

LaSalle Street News Cash Markets

-- CIF Corn steady off 5.  June +75 to +82, FH July +70 to +76, July +55 to
+61, Aug. +80 to +85 , Sept. +61 to +70, O/N/D +56 to +60

TREND:

The corn market gapped into new highs and quickly met initial counts with
our limit move to the $5.94 level. The condition reports this afternoon
should give us enough of a boost to tackle this year’s highs at $5.97 and
trigger a run to its next counts at $6.16. Look for the $6.15 to $6.20 area
to finally slow down this move. Today’s gap has left the $5.70 level as
support.

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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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