Linn Group Morning Corn Comment

CHICAGO - Dec 2/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was lower on Monday, continuing the selling that started on
Sunday night as the grain markets reacted to the outside markets and traders
said they saw speculative selling coming into the corn market.  The March
corn closed down about 17 cents as the corn market was actually pretty quiet
as the highs were made on the opening and the lows made in the first 60 min
of trade.  After the 1st hour of trade, the corn market traded lower in a
pretty tight trading range.  The outside markets helped push the grains
lower as crude oil was down $4-5 most of the day closing down over $5 and
the US$ was stronger all day.  The corn market is not yet completely trading
the fundamentals and with the crude and the financial markets taking a
beating yesterday, commodities followed.  Traders also pointed to rains in
So. America helping improve dry soil conditions as another reason that corn
broke down to new 14 month lows on Monday morning.  The ethanol industry
remains in turmoil and with the announcement that Pilgrim's Pride filed for
bankruptcy, the corn market sold off.  The volume was about 194,000
contracts and funds were net sellers of 6,000+ contracts.

Overnight, the market opened lower which wasn't unexpected as the financial
markets and the crude market both went lower after the grains closed.  The
corn market traded lower most of the night before rallying in the last hour
and closing up slightly/unchanged.  Overall, it was a quiet night for grains
as the market digests the new lows in corn and traders watch the outside
markets.  The USDA announced 330,000 mt in corn sales to Mexico this morning
with 120,000 of that coming in 09/10.  This will be welcome news for the
bulls, but it shouldn't add much strength to the corn market as export sales
are still over 35% behind last year.  The corn market should open higher
this morning as the outside markets should help the grain complex.  The
financials and crude is higher and the US$ is lower.  The corn market should
have trouble rallying and should find willing sellers if the corn market
gets 10 cents higher.  Technically, the corn market is probably due a
bounce, but nothing has changed to make us think the corn market has turned.
The corn market will be called 1-3 higher this morning and it will look to
the outside markets for direction.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 333^0    0^2                   333^0    330^0    300

ZCH9                349^0    0^2                   349^0    345^0    3174

ZCK9                360^0    0^0                   360^0    356^6    91

ZCN9                370^6    0^0                   370^6    368^4    96

Early Opening Calls: 1-3 cents better

Top News

-- Breakdown: USDA reports private sale of a total 330,000 mt of Corn to
Mexico; of that figure 210,000 mt is for 08/09 MY while the balance of
120,000 mt is for 09/10 MY

-- In a second round of purchases announced by the Chinese state run Grain
Administration, they will buy 5 mln mt of Corn from domestic producers & buy
1.5 mln mt of additional Soybeans for state reserves

-- Weekly White Corn exports from S Africa totaled 30,416 mt vs. the 25,244
mt exported last week, acc. to gov't data

-- CBOT Deliveries: Corn 1,850

-- Monday's USDA Weekly Corn Inspections: 32.580 mln bu ; expected 22.5 mln
bu

-- Russian data shows the gov't on Dec 2nd bought 211,410 mt of various
grades of Wheat at its intervention tender; they bought 20,520 mt of feed
Barley also.  The latest data brings MY to date all grains volume to 2.223
mln mt purchased via intervention tenders

-- USDA lowers its 2009 farm exports forecast by $14.5 bln to $98.5 bln in
expected farm sector exports

-- NBER, the group that official pronounces US economic recessions, say the
current US recession started in December 2007

-- China's state run space technology academy on Monday launched a remote
sensing satellite for crop yield estimating, land resource surveying as well
as natural disaster prevention & to help with relief efforts.

-- Argentine Ag Sec. asks for patience while the gov't draws up measures to
help farmers weather the drop in worldwide ag commodities & expects the
measures to be released soon.  Meanwhile top farm leader is planning
nationwide strike on Dec 10th against gov't policies.

-- Office in charge of ag export commerce says the gov't will seek to make
farm exports limits permanent.

-- May Dalian corn futures were off 15 Yuan at 1,524 Yuan/mt.($1 = 6.88
Yuan)

-- Liffe Jan corn futures were unchanged at 116.5 euros/mt.

-- Globex Corn Vol: 159,191; Pit Vol.: 30,406; Open Interest change: -
10,517

-- Weather: 6-10 Day Forecast: Below Normal Temps. Above Normal Precip. The
Corn Belt looks dry today. Wednesday will see some light showers and snow
favoring central and northern areas. Thursday and Friday look dry. Some snow
north Saturday. Temps below normal.

-- Outside markets: Energy Complex +0.32 at $49.60; Gold & Silver: +10.5 at
$785.1 & +0.277 at $9.640; US $ is lower vs. Euro & is trading better vs.
Yen.

Cash Markets

-- CIF Corn steady. Dec. +23H to +25H, LH Dec. +27 to +30, Jan. +32 to +34,
Feb. +35 to +38, Mar. +34 to +37, Apr. +34 to +37, May +34 to +37

TREND:

Corn was the only market that moved into new contract lows with the bearish
reaction today. The close below 3.50 in CH sets up a test of 3.30 to 3.20.

Wheat did not make new lows but tested the old lows hard. Still see this
market able to move into new lows and test 4.40 to 4.30.



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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