Linn Group Morning Corn Comment

CHICAGO - Oct 10/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market moved higher on Thursday as we got the expected short
covering into the USDA report to be released this morning.  It was a
relatively calm in the financial markets until the final 2 hours after the
grains closed.  The December contract closed up 10 ¾ near the highs as we
saw mostly two sided trade as some traders covered futures and moved into
puts and other bot calls against their short futures.  The global financial
system seems to be taking center stage right now in the grain markets and
the fundamental data is largely ignored.  The back months seemed to find
some strength because there continues to be talk of the need for an acreage
battle to get corn acres this spring.

Overnight, the corn market exploded lower on the collapse of the financial
markets after the grains closed.  Then today, we get a bearish crop report
and the markets are called limit down today.  We know the financial markets
are in control of the markets right now and the fundamentals don’t mean
anything, but you can’t ignore the bearish fundamentals along with the
global financial crisis.  The corn market should open 20-30 lower today and
then look for direction.  Watch out for a recovery in financials and/or
crude oil.  See all the detail of the crop report below.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 413^4    -24^6                 429^0    411^0    11354

ZCH9                430^0    -25^6                 450^0    428^4    1286

ZCK9                441^2    -26^2                 460^4    441^0    252

ZCN9                452^0    -26^2                 471^2    451^2    679

Early Opening Calls: 25-30 lower

USDA Report Data:

**US Oct Corn 08/09 Crop Prod: 12.200 bln bu.; est. 12.08 bln bu; Sept
12.072 bln bu.

**US Oct Corn 08/09 Yield: 154.00 bu/ac; expected 152.2 bu/ac; Sept 152.3
bu/ac

**US Oct Corn 08/09 Carryout:   1.154 bln bu.; est. 1.14; Sept Rpt 1.018

**World 08/09 Corn Carryout: 107.8 mmt; Sept 109.9

**Oct China 08/09 Corn Output: 156.0 mmt; Sept Rpt 156.0

**Oct S Africa 08/09 Corn Output: 11.5 mmt; Sept Rpt 11.5

**Oct Argentina 08/09 Corn Output: 19.0 mmt; Sept Rpt 19.0

Top News

-- Exports of barley from the Ukraine in the first 5 days of Oct were
120,400 mt a rise of 9%, acc. to local ag analyst ProAgro

-- 20,000 mt of food grade Barley & 5,500 mt of beer Barley were bought by
Japan's Ag Ministry on Friday

-- Chinese economic policy think tank forecasts that country's growth in
2009 at 9.5% even in the midst of a global financial market crisis, they
kept their 2008 forecast at 10.1%

-- Dalian May Corn futures on Friday fell 49 Yuan to 1,620 Yuan/mt.  Volume
in May contract was just over 1.0 mln contracts traded.  Other futures
months fell also.

-- Liffe Nov corn futures were off 4 euro at 127 euros/mt.

-- Globex Corn Vol: 161,360; Pit Vol.: 18,312; Open Interest change: - 2,526

-- Weather: 6-10 Day Forecast:  Normal to Above Temps. Normal to Above
Precip. The Corn Belt looks dry today and Saturday other than a few light
showers in the northwest areas.  Showers develop late Sunday in the west and
move to the east by Tuesday. Temps normal to above.

-- Outside markets: Energy Complex -3.78 at $82.81; Gold & Silver: +39.4 at
$921.8 & -0.404 at $11.471; US $ is trading better vs. Euro & is off
slightly vs. Yen.

Cash Markets

-- CIF Corn  off 2 to 4. Oct. +53 to +55, Nov. +53 to +54, Dec. +53 to +56,
Jan. +40 to +44 Feb. +40 to +44, Mar. +40 to +44

TREND:

Both corn and beans went a step toward confirming the reversals of
yesterday---but it goes right into a crop report tomorrow when this can be
broken down?

Trade is expecting a bullish bean production est---so may be hard to get one
unless it is really big. Would take a yield under 39 to 38.5 to have a big
impact and even then the bean market will have considerable overhead at
10.50 to 11.00.

Corn is expecting bigger yields in general and a reduction in demand---but
also on a big short covering rally into the close today. Already 38 cents
off the lows with considerable overhead at the 4.50 gap and then 5.00.



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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