Linn Group Morning Corn Comment

CHICAGO - Jan 2/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market was higher on Wednesday as the last day of the fiscal year
brought about fund buying and a lack of selling pressure.  The March
contract was up about 11 cents as it followed the soybean market and the
outside markets higher.  The crude oil really led the commodity markets
higher as it was up over $6 during the trading session and the grain markets
followed.  The rise in commodity prices was on light volume.  The rise in
grain prices almost became a self-fulfilling prophecy as the floor traders
asked and received an extended closing trading range as they expected to see
big fund buying orders at the end of the trading session.  This encouraged
traders to jump in front of these trades and buy the commodity markets in
the middle of the session expecting the market to rise.  As I have been
saying this week, it is tough to buy into some of the moves in the grain
markets the last 2 weeks because of the light volume and many traders taking
time off.  Traders/analysts are still looking at the crop conditions in So.
America and if the dry areas are going to get the rain they need.  The
volume on Wednesday was about 100,000 contracts and funds were net buyers at
the end of the day of about 5,000+ contracts.

There wasn't any overnight trade, but we did have the weekly export sales
this morning.  The estimates this morning were for between 250,000 to
400,000 mt and actual sales were 269,900, so that is within the estimates,
but still pretty light.  Export sales are down significantly from last year
as many countries that imported corn from the US last year usually imported
feed wheat and went back to that this year.  The demand destruction that we
have talked about since last summer can be seen dramatically in the
reduction of exports.  As the price of corn went higher and the world
economies got worse, the demand for corn went away.  The corn market should
open lower today as the outside markets are negative and export sales
weren't very good.  The outside markets opened at 5am this morning and were
very negative to start the day, but have actually improved as the morning
went on, so maybe we aren't as weak as first thought.  The demand for corn
is still suspect and until something changes, any move higher will be sold
by traders.  The funds may be the wild card right now as we had some index
funds buying commodities on Wednesday and that may continue today.  I am
still suspect of any rally in the grain markets because the lack of demand
is going to restrict gains unless we have weather problems in So. America
and/or an acreage battle this spring.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

Did not trade

Early Opening Calls: off 3-5 cents

Top News

**USDA Corn 08/09 Export Sales Net: 269,900 mt; 09/10 Net: NONE mt; expected
250-400k mt

-- Japan is seeking 30,000 mt of feed Wheat under their SBS system on
January 7th, they're also seeking to import 200,000 mt of feed Barley in the
SBS system on the same day.

-- Oct 1 - Jan 2 winter Corn plantings for the Indian crop are estimated at
922,000 ha up from last year's 883,000 ha, acc. to gov't data

-- On Wednesday, the CBOT agricultural futures products market on close
(MOC) period was expanded from the usual 1 minute period to a 2 minute
period, the market on close period was 1:13 pm to 1:15 pm. Some floor
personnel suggest the change was in response to filling brokers request in
anticipation of heavy end of year fund trades.

-- Dalian soybean & corn futures markets were closed on January 2nd, 2009

-- Liffe Jan corn futures were 2.00 euro better at 120 euros/mt.

-- Globex Corn Vol: 84,033; Pit Vol.: 12,956; Open Interest change: + 7,159

-- Outside markets: Energy Complex -1.89 at $42.71; Gold & Silver: -12.1 at
$872.7 & -0.130 at $11.173; US $ is slightly better vs. Euro & Yen.



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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