Linn Group Morning Corn Comment

CHICAGO - Nov 18/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed higher on Monday, rallying at the end of the day
after trading in a tight trading range most of the day.  The December
contract closed up 5 ½ cents after trading up 2-3 cents most of the day.
The corn market divested itself from the energy markets yesterday as we had
crude oil lower most of the session getting to $2 lower at one point and the
US$ was higher most of the trading session.  Maybe the grain markets are
starting to trade on their own fundamentals, but with the lack of news, corn
has settled into a tight trading range.  Traders/analysts say the strength
in corn is from short covering and corn/wheat spreading with wheat down over
20 cents yesterday.  The short covering in corn is coming from traders that
felt corn would make another run down at the lows and it just hasn’t
happened.  As long as corn trades in a sideways market, traders are going to
think that the corn market is making a harvest low and they will continue to
cover shorts regardless of what the fundamentals are telling them.
Estimates for 2009 planted acres and dryness down in Argentina also helped
support the corn market on Monday.  The lack of demand is still weighing on
the corn market and will until something improves.  Export sales continue to
be disappointing and we continue to hear stories about ethanol plants that
are in trouble.  The volume yesterday was only about 200,000 contracts and
funds were small buyers.

Overnight, corn closed down about 5 cents in a tight trading range of only 5
cents.  There isn’t really any new news out on the grain markets right now,
so the markets are watching outside markets and trying to decide if the
market has made a harvest low or if there is another leg down.  The bottom
line is that nothing has really changed the last couple of weeks and corn is
just sitting in a trading range.  The market almost seems like it is waiting
for another shoe to drop or it is waiting for something positive to come out
and change the trend.  We have the Thanksgiving holiday coming up next week
and sometimes, that holiday can stimulate a trend change.  Crop progress
showed only 78% of the corn crop harvested which is still way behind the 5yr
average and that will help support the market, but the lack of demand today
will limit that support.  The corn market should open lower this morning,
but I wouldn’t expect too much downside because crude oil has rallied higher
on the day after the grains closed this morning.  Look for either the
outside markets or one of the other grains to be the catalyst to break corn
out of its recent trading range.  There has been a lot of traders talking
about selling options to take advantage of the trading ranges, so a break
out either way could be pushed by traders covering their positions.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 380^6    -5^0                  384^4    379^4    3069

ZCH9                398^0    -5^0                  401^6    396^6    939

ZCK9                409^6    -5^0                  412^6    409^6    60

ZCN9                421^0    -5^0                  424^6    420^0    191

Early Opening Calls: off 3-5 cents

Top News

-- A weakening Brazil currency, falling freight rates & a ban on Corn
exports out of India will likely limit India's 08/09 MY exports to 200,000
mt down from the prior year's 3 mln mt, acc. to private export official

-- Monday's USDA Corn Harvest Progress is 78% complete.

-- Monday's USDA Corn Export Inspections: 25.050 mln bu; expected 21.0 mln
bu.

-- Buenos Aires grain exchange weekly crop report sees 08/09 Corn planted
acreage down slightly to 2.64 mln ha from 2.7 mln ha in the prior report.
They estimate 74% of the crop has been planted.

-- Russia's ag minister is pressing the gov't to slash poultry & pork import
quota volumes, saying the Russian ag industry can make up the import volumes
with domestic production.

-- 10.21% of renewable fuel must be blended into US gasoline supply in 2009
up from 2008 7.76%, acc. to US EPA. That will require 11.1 bln gallons of
renewable fuels blending vs. the 9 bln gallons in 2008

-- 7 yr old dairy cow with "mad cow" disease was confirmed by Canada's
gov't, but says the animal did not enter food or feed chain.  The gov't says
its location in western Canada & age are consistent with prior cases.

-- According to EIA weekly nationwide gasoline price data average pump
prices fell to prices not seen since March 2005.  Prices in the latest
period averaged $2.072/gal down 15.2c/gal from the prior week & $1.027/gal
lower than yr ago week

-- Corn futures for May delivery on the Dalian Exchange rose 2 Yuan in
overnight trade to settle at 1,597 Yuan/mt

-- Liffe Jan corn futures were off 1.50 euro at 125 euros/mt.

-- Globex Corn Vol: 171,965; Pit Vol.: 18,070; Open Interest change: - 1,734

-- Weather: 6-10 Day Forecast: Normal to Above Temps. Normal to Below
Precip. The Corn Belt looks dry today into Friday. Saturday will see some
light rain or snow. Temps below normal.

-- Outside markets: Energy Complex +0.56 at $55.51; Gold & Silver: -4.7 at
$736.6 & -0.102 at $9.233; US $ is better vs. Euro & is off slightly vs.
Yen.

Cash Markets

-- CIF Corn off 2 to 5. Nov. +?? to +34, LH Nov. +?? To +39, Dec. +?? to
+42, Jan. +35 to +37 Feb. +35 to +37, Mar. +35 to +37, Apr. +34 to +37

TREND:

Grain markets seemed to divorce themselves from the outside markets some
today---or maybe it was the outside markets were not all one direction?

Look to sell back out corn bot last week at $3.90 to 4.00 in CZ. I would
rather be early than late. This market should give you a lot of buying
opportunities.

Wheat should find some support as it test recent lows but our original
counts off long term charts took WZ down to $4.60 to 4.50. Not sure why the
quality wheat markets led the weakness today other than the cash is not all
that strong for any class of wheat. There is absolutely no way US wheat will
complete in the current environment. The cheapest origin in the world is
concerned about the world demand slowing and is talking about further
discounts.



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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