Linn Group Morning Corn Comment

CHICAGO - Mar 23/07 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

This may sound like a broken record, but soybeans were led higher again on
Thursday by the deferred months as the Nov08 reached new highs.  Different
analysts are saying this attempt to buy acres this far in the future is
unheard of in the past, but we are in a different type of market that most
traders have ever seen.  This rally in deferred has been on thin trade, but
some contracts are up over 50 cents this week alone.  Very light volume
yesterday with the funds buying app. 2,000 contracts.  With little to no
news out ahead of the USDA report next week, traders are looking at the
corn/bean relationship and spread trade.  The sharp increase in corn prices
has encouraged more acres, meaning less bean acres this year and lower
stocks next year.  The rise in Nov08 prices is the market trying to
encourage farmers, specifically in So. America, to plant more beans next
year.  The soybean rally supported the products and soybean oil pushed
higher with the crude oil market up over $2.00 yesterday afternoon.  Weather
in So. America is encouraging as we have drier weather in Brazil helping the
harvest along and rains in Argentina is helping fill some late planted
beans.  The impending harvest in So. America will hang over the soybean
futures.

eCBOT market was very quiet overnight with the May closing unchanged with
only a 2 cent range.  After the release of the Weekly export sales, the
market has very little news to trade off until the end of next week.  Some
traders saying it will be just good to get the wait over as we have been
talking about this report for a month.  Look for soybeans to come under
pressure today after today's rally yesterday was led by light fund buying
and a push to buy acres in the deferred the months.  Big soy stocks and So.
American harvest will weigh on the markets as well as many traders will want
to take profit on long positions into the weekend.  We should still see very
choppy trade and starting next week, we will traders position themselves for
the USDA report and its impending release a week from today.

eCBOT Overnight

Contract            Last      Net Change       High      Low

ZSK7                771^4    -0^2                  771^4    769^2

ZSN7                785^0    -3^0                  787^2    785^0

ZSQ7                794^0    -0^2                  794^0    794^0

ZSX7                 814^6    -0^4                  815^0    813^0

ZMK7                223.0    -0.4                   223.7    222.7

ZMN7                227.9    -0.5                   228.0    227.6

ZLK7                 31.38    0.10                  31.41    31.19

ZLN7                 31.85    0.11                  31.88    31.72

Early Opening Calls: Soybeans steady; Soymeal steady/lower; Soyoil 10 - 20c
higher

Top News

-- South Korea tendering for 150,000 mt. opt. org. non GMO Soybeans for
Jan/July.

-- EU's 2007 grain harvest expected to be +7.74% higher than last year to
278.41 mil tons;  soft wheat leading the way with a near 10 mil ton increase
(9% increase), acc. to Coceral

-- Chinese Jan-Feb soybean imports from the United States jump +52% to 3.61
mil tons total - Argentina posts only a +10% gain, acc. to Chinese Customs
data

Chinese soybean oil imports +19.5% in Jan-Feb period to 364k tons - mostly
from Argentina, acc. to Chinese Customs data

-- ABIOVE:  Brazil soybean production expected to reach 58.6 mil tons, which
is an increase of 2.7% from Feb.'s estimate

-- Cattle On Feed report today at 2:00 pm CT.

-- Cattle On Feed Industry Estimates for Mar 23 report

=======================================================

Avg Estimates

--------------------------------------

On Feed March 1st                     97.0% avg est

Placements during Feb.              103.0% avg est

Marketings in Feb.         106.0% avg est

-- Chinese Soybean and Meal futures closed higher, and Oil mixed

-- Soybean spreads: ABN 1,800 SX/SN, Tenco 800 SN/SX, RJ 500 SQ/SK, 700
SX/SN8

-- Dollar mixed vs. Euro & Yen; crude oil & gasoline higher; gold unchanged.

-- Above normal precip Friday thru Sunday; Above normal temps into next week

-- Volume was 74.9 with open interest up 7.4 to 483.3

Cash Markets

-- CIF Corn:  Mar. +22 to +25,  Apr. +24 to +27, May +30 to +32, June +?? to
+26, July +28 to  +33, Aug. +31 to +37, Oct. +28 to +32.

-- Processors: Decatur  -28   Danville -30   Bloomington -30  Gibson City
-25

-- Board Crush Margins:   May  63.81 off  .85   July  63.62  off  2.20

TREND:

Market still marking time not able to break down or rally in this
environment. It may be really simpleton but trying to buy breaks in corn and
beans while selling rallies in wheat. Not holding positions long with quick
profits feeling like the right thing to do.

The carries in the far out markets have widened enough to cause me to look
at bull spreads. There seems to be more liquidity out there than
normal---until something happens to cause all the bids and offers to be
pulled---not sure when that comes? Tend to be bull spread now as a weather
call?

This long bean trade seems the best for a position going into the report. If
the world gets 12 to 15 mil corn acres---beans will be sure to react to a
cut in acres of a magnitude to make that many corn acres. If the corn acre
increase is only 5 to 7 mil---corn will lead the rally but beans will get
tugged along. Too simple?



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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