Linn Group Morning Corn Comment

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

The corn market closed lower on Tuesday as the corn market couldn’t hold the
early gains against resistance levels.  The March contract closed down about
3 cents which was near the lows of the session and about 7 cents off the
highs.  There really wasn’t any new news out except the EPA announcing it
was delaying the decision on raising the ethanol blend until next summer as
they continue to study a 15% allocation and the effects on cars.  The
announcement got a mixed reaction as it helped pressure futures because many
were expecting a decision this week, but it rallied ethanol related stocks
as the statement implied that the increase to 15% was a foregone conclusion
next summer as long as the tests were ok.  Corn was also pressured late in
the day when the expected fund buying didn’t materialize and traders took
profits or squared their positions.  The outside markets remained very
positive for grain prices, but the markets seemed to shake off these markets
and all the grains sold off in the final 15-30 min.  The volume was weaker
than usual at 210,000 contracts and funds were sellers of an estimated
6,000+ contracts.

Overnight, corn traded lower all night, but it had a pretty tight trading
range of only 3 cents.  The March contract closed down 1 ½ on the lack of
any new fundamental news.  The market will now find out what it is made of
as we hit the resistance levels again yesterday and failed and we are lower
overnight.  The corn market looks like it wants to go higher, but the lack
of fundamental data and traders willing to sell into new highs should
prevent corn from moving higher unless we have a new positive catalyst to
move the market higher.  There is some talk that we won’t see the fund
buying at the end of the year in commodities like we have seen in past years
and with the lack of demand, corn is going to have trouble making new highs.
The outside markets this morning are all about unchanged on the day so not
much to talk about today so the grains are on their own for the opening.  It
will be an interesting day in corn as when it has hit recent highs, it has
sold off.  The corn market will be called slightly lower today, but we will
see if it can gain any downside momentum if it doesn’t find support.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ9                 398^4    -1^2                  399^0    396^0    256

ZCH10              413^0    -1^4                  413^6    410^4    4112

ZCK10              422^4    -2^0                  423^6    420^6    172

ZCN10              431^4    -1^2                  432^2    429^2    502

ZCU10              438^0    -0^4                  438^0    435^2    52

Early Opening Calls: off 1-2 cents

Top News

-- Production of grain in Turkey was pegged at 33.6 mln mt in 2009 up 14.5%
from the prior crop year, acc. to state stats bureau.  Wheat output is 20.6
mln mt and barley was 7.3 mln mt

-- Top official at the Farm Credit Admin says US farmers & ranchers will see
tougher credit standards over the near to medium term, but says adequate
funding will be available

-- 82% of CME Group's total 216 mln contract volume in November was traded
electronically

-- Dec 8th is bid deadline for USDA's CCC 241,800 mt US Sorghum tender for
donation to Ethiopia & Sudan.

-- The EPA decided to delay their decision on Growth Energy's petition to
allow ethanol blend limits up to 15% until June 2010.  Despite the delay in
the decision, ethanol supporters took solace in comments made by the EPA,
suggesting that newer cars could handle an E-15 blend, which implies to some
it may be approved at the new June 2010 deadline

-- Creditors are seeking a buyer for Pine Lake Corn Processor's 30 mil
gal/yr plant in Steamboat Rock, IA

-- An executive at Royal Dutch Shell, which has invested millions in next
generation biofuel research, notes technology such as cellulosic ethanol is
"quite a number of years" away

-- Analysts note Sept US ethanol imports of 12.9 million gallons were
roughly offset by US ethanol exports of 12.7 million gallons during the
month

-- DECEMBER 2009 CORN FUTURES 12/1/09 : 481 contracts

-- DECEMBER 2009 ETHANOL FUTURES 12/1/09 : 0 contracts

-- Pending Tender: With a preference toward SE Asia supplier, a feed maker
in the Philippines is seeking 20,000 mt of Corn for delivery from Mid Jan to
early Feb, acc. to traders

-- Liffe Jan corn futures were off -0.75 euro at 136.00 euros/mt.

-- May Dalian corn futures were off 1 to 1,786 yuan/mt, Sept 2010 contract
was unchanged at 1,845 yuan/tm

-- Globex Corn Vol: 188,121; Pit Vol.: 16,785; Open Interest change: + 2,197

-- Weather: 6-10 day Forecast: Below Normal Temps. Normal to Above Precip.

-- Outside markets: Energy Complex -0.50 at $77.87; Gold & Silver: +9.9 at
$1209.0 & +0.090 at $19.270; US $ +0.030 at $74.450

Cash Markets

-- CIF Corn steady off 4.  Dec. +26 to +29, LH Dec. +30 to +34, Jan. +36 to
+37, Feb. +37 to +41, Mar. +37 to +41, April +39 to +43, May +39 to +43,
June +39 to +43, July +39 to +43

TREND:

Bullish forecast always spoil the trade---Oh well.

Corn still has not proven it can take out the Oct and Nov highs around 4.25.
If and when it does, it sets in motion a trade to test 4.75. After today’s
trade look for the market to test support at 4.10 to 4.05.

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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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