Linn Group Morning Corn Comment

CHICAGO - Dec 9/09 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on Tuesday on a really quiet day as
corn only had a 4 cent trading range all day session.  The March contract
closed up about 1 cent after trading up 1-2 most of the trading day.  The
outside markets were negative so corn seemed to move away from those
markets, but with the recent break, we could just be seeing some profit
taking ahead of the USDA report tomorrow morning.  There was also talk that
we saw some corn/bean and corn/wheat spreading going on into the report.
The snow storm that was hitting the Midwest yesterday and today will stop
combines for awhile, but traders/analysts are mixed on the effect it will
have on corn.  The bulls want to point to the number of acres/bushels still
in the field and the expected losses, but the bears will tell you that over
90% of the corn is harvested and the little that remains will get harvested
eventually even if it is next spring.  The biggest question right now is
demand or should I say the lack of demand and that is what the market is
concentrating on for the near term.  The volume was about 161,000 which is
lower than we have been in awhile and funds were small buyers of about
2,000+ contracts.

Overnight, the corn market was higher again as we continue to see profit
taking and inter-commodity spreading in front of the USDA report.  The March
contract closed up about 3 cents on the night, but the trading range again
was only about 4 cents.  We will probably see some more profit
taking/position squaring in front of the USDA report tomorrow morning, but
the report tomorrow isn’t really a big deal because we don’t get new
production numbers.  The main thing in tomorrow’s report will be the
carryout number and the market is looking for a slight increase in the corn
carryout.  The grain markets seem to be buying time until the January report
trading very quietly right now which usually is a dangerous time to trade
markets.  The old saying of never to sell a quiet market was bantered around
yesterday.  We will also get export sales tomorrow, but the market isn’t
expecting much as US corn is priced higher than most other countries and the
only good export sales we have had the last couple of months was sales to
Mexico.  The corn market will be called slightly higher today, but I
wouldn’t expect too much and any big rally will probably be sold.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ9                 373^0    3^4                   373^0    369^4    234

ZCH10              388^2    3^2                   388^6    385^0    4992

ZCK10              399^2    3^2                   399^2    396^0    335

ZCN10              409^0    3^2                   409^2    405^6    203

ZCU10              416^4    3^4                   416^4    413^0    44

Early Opening Calls: 2-3 cents better

Top News

-- Liffe Jan corn futures were off -1.25 euro at 132.25 euros/mt.

-- Dalian Sep corn futures were 4 yuan better at 1,856 yuan/mt.($1 = 6.83
yuan)

-- Globex Corn Vol: 138,742; Pit Vol.: 19,117; Open Interest change: + 3,326

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

-- Rabobank anticipates better demand for corn, sees higher prices during
early 2010

-- Traders indicate Taiwan's corn Procurement Association expected to tender
45,000 to 60,000 mt of US or Brazil origin corn on Friday, for late
Jan.-early Feb. delivery

-- South African Corn deliveries up 20,000 mt in previous week to 11.15 mln
mt, acc. to SAGIS

-- Outside markets: Energy Complex +0.52 at $73.14; Gold & Silver: -0.8 at
$1142.5 & +0.003 at $17.810; US $ -0.205 at $76.125

-- So. Korea in for 110,000 mt of corn for April delivery; US and South
American origin, acc. to traders

Cash Markets

--CIF Corn steady,  off 3..Dec. +?? to +14,  Jan. +24 to +28, Feb. +32 to
+38 ,Mar. +35 to +40, April +35 to +38, May +35 to +38, June +35 to +38,
July +36 to +3

TREND:

The corn market slowed its decline for the moment as we try to correct
oversold conditions. This could promote a s/t bounce but last week’s break
suggests a bit more to the downside. Expect the $3.90 to $3.95 range to keep
a lid on rallies for the moment. However, downside targets should fall near
the $3.72 ½ lows. Look for short covering there.

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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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