Linn Group Morning Corn Comment

CHICAGO - Feb 23/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Friday, but it did close off the lows that it
made early in the trading session.  The July and December contracts closed
about 3-4 cents lower after being over 10 cents lower during the day
session.  The corn market was following the beans lower as the bean market
sold off early and often as the weather premium from So. America came out of
the soybean market in almost 1 week.  The weekly export sales were good on
Friday, but the market seemed to shrug them off and go lower, but found
support late in the trading session.  Traders/analysts said we probably saw
some profit taking after the drop last week, especially in the soybean
market and we do see some end users covering their needs at these lower
prices.  Export sales the last 5 weeks have topped 1 mil each week, which is
showing that corn does have some value down at these prices, but you can't
fight the lack of demand as compared to past year.  The volume was good on
Friday at 260,000 contracts and funds were net sellers of 5,000 contracts.
Overnight, the corn market bounced as some of the outside markets lent
support and we saw traders taking profits after the break last week and the
rally late in the day on Friday.  I hate to look at the rally overnight too
closely, but it can't be ignored as the corn market seems to find support by
end users at these price levels.  The corn market is in the middle of the
production vs. demand destruction and we are waiting to see which one will
win.  The demand for corn seems to be helping support the market, but there
is plenty of corn available and it seems as we have turned the corner in So.
America and we have a pretty good idea on production as we are getting close
to the end of the growing season.  The USDA announced export sales to So.
Korea this morning of 108,000 tones this morning, continuing the strength
and support we have seen the last 4-6 weeks.  Corn will be called higher
this morning in-line with the closes overnight, but as I continue to tell
clients, it isn't how the markets open, but how the markets close at the end
of the day.
Globex Overnight
Contract            Last      Net Change       High      Low      Volume
ZCH9                359^4    9^2                   359^6    349^4    5065
ZCK9                368^2    9^2                   368^4    358^2    2848
ZCN9                378^0    9^4                   378^2    368^0    803
ZCU9                382^0    4^2                   382^0    377^4    18
Early Opening Calls: 7-9 cents better
Top News
-- USDA reported private sale of 108,000 mt of US Corn was sold to S Korea
for the 08/09 MY
-- On Friday the Buenos Aires Grain Exchange weekly report lowers the
country's 08/09 Corn production figure to 13.8 mln mt from the prior week's
estimate of 14.0 mln mt
-- The CFTC reported that large speculators have cut their net longs in US
corn futures by almost a half, 21,351 contracts, in the week ending Feb.17
-- Farmers in Argentina say they have plans to launch a strike due to
continuing Argentine gov't farm policies - expected to stop grain sales from
Friday Feb 20th to Tuesday Feb 24th - acc. to Reuters headlines
-- Friday's USDA Cattle On Feed Feb 1: 94.0%; expected 94.0%; prior month
93.0%
-- Friday's USDA Cattle Placements during Jan: 104%; expected 102.0%; prior
month 97.0%
-- Friday's USDA Cattle Marketings during Jan: 94%; expected 93.0%; prior
month 102.0%
-- KC Fed research paper on agriculture credit expects banks that specialize
in ag credit to tighten their credit & collateral standards in an effort to
preserve capital & manage economic risk. Also, as some farm land values
soften, that will lower the amount of land used as collateral for loans.
-- Dalian Sep corn futures were 5 Yuan better at 1,691 Yuan/mt.($1 = 6.84
Yuan)
-- Liffe Jun corn futures were +1.00 euro better at 133.5 euros/mt.
-- Globex Corn Vol: 219,932; Pit Vol.: 30,900; Open Interest change: -
25,806
-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Above
Precip.
-- Outside markets: Energy Complex +1.06 at $41.09; Gold & Silver: -15.7 at
$985.4 & -0.219 at $14.266; US $ is better vs. Euro & Yen.
Cash Markets
CIF Corn steady off 1 up 1.Feb. +49 to +52, Mar. +49 to +52, Apr. +44 to
+46, May +44 to +46,June +37 to +40,July +37 to +40 Aug. +40 to +44, Sept.
+40 to +44, Oct. +39 to +40
TREND:
The carries in corn have tended to tighten a little over the last week.
Index fund roll ended late last week and the cash has been very firm.
Indications of 30 over trading into eastern ethanol plants. Barges have also
remained firm as the barge freight has weakened over the last two weeks.
Barge bids are about 4 to 5 cents short of taking upper Ill River deliveries
to the gulf as cash. The chart at the right is H-N corn. It appears ready to
move into new highs but look for this to falter. There is no reason for cash
tightness with Mch 1 farmer owned stocks expected to be very heavy. Note the
carries are in the market all the way to Jly 2010 at around 65 cents. This
offers a marketing alternative for farmers---sell the carry. It is unlikely
this market allows you to earn this much in flat price.
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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