Linn Group Morning Corn Comment

CHICAGO - Feb 10/10 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

The corn market closed slightly higher on Tuesday after the USDA lowered the
ending stocks and the outside markets were supportive.  The March and
December contracts closed up about 2-3 cents which was about 5 cents off the
highs made early in the session.  The USDA lowered the ending stocks by
increasing the ethanol production but they did lower exports which is great
news.  This report is usually a non event, but with the lack of news and the
big drop, it was being watched closer than usual.  Both the bulls and the
bears were looking for some indications in this report to move the market,
but there wasn’t much there and now we will await the next report in 30 days
when we will get updated production numbers.  The US$ was weaker and stocks
and crude were higher which helped support corn, but it still remains to be
seen if this is just a bounce from the recent moves or if there is trend
change.  There were rumors circulating that the EU would bail out Greece and
that helped the financial markets move higher, but nothing has been
officially announced.  We had big volume with 378,000 contracts and funds
were buyers of about 5,000+ contracts.

Overnight, the corn market traded unchanged to slightly higher most of the
night before closing down on the lows, down about 1 ½ cents lower.  There
isn’t a lot of new news out this morning and the outside markets are mixed
with crude, stocks, and the US$ trading on both sides of unchanged this
morning.  The weather in Brazil and Argentina remains good which is a
non-factor as we get closer to harvest.  There was a story out of Brazil
yesterday that they were going to maintain their import tariff on ethanol
imports which should limit the potential for the US to export ethanol into
Brazil which would be supportive to corn prices.  This isn’t a huge deal and
with the current margins, it is still profitable to export ethanol to
Brazil, but it is another market that could possibly be closed.  The current
weather across the Midwest could be short term supportive since it will be
difficult to move any grain as big snow fell across most of the Midwest.
The corn market will be called to open slightly lower this morning ahead of
the opening depending on the outside markets when the grains open.  Without
any new news, the corn market will look to the outside markets and the funds
for direction.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCH10              356^6    -1^6                  360^4    356^6    5224

ZCK10              368^4    -1^6                  372^0    368^4    2646

ZCN10              379^6    -1^0                  382^2    379^2    1510

ZCU10              386^0    -1^2                  389^0    386^0    488

Early Opening Calls: off 1-3 cents

Top News

-- 09/10 Corn ending stockpiles pegged at 2.68 mln mt up from January's 2.04
mln mt, acc. to Franceagrimer

-- 09/10 Barley ending stockpiles pegged at 4.1 mln mt up from January's 3.8
mln mt, acc. to Franceagrimer

-- Chinese Customs data shows January Corn exports totaled 41,981 mt vs.
36,243 mt in December and only 26 mt a year ago

-- Pending Tender: CCC launches Feb 10 tender deadline for 103,960 mt of US
Sorghum for donation to Ethiopia and Sudan

-- Pending Tender: In a tender scheduled for February 19th, Japan's Ag
Ministry is seeking 41,000 mt of food grade Barley under SBS tender rules,
acc. to officials at the ministry

-- Sep Dalian Corn futures rose 5 yuan to settle Wednesday at 1,852 yuan/mt

-- Liffe March corn futures were off -0.75 euro at 132.25 euros/mt.

-- Globex Corn Vol: 320,412; Pit Vol.: 49,630; Open Interest change: - 1,045

-- Weather: 6 - 10 Day Forecast: Normal to Below Temps. Normal to below
Precip.

-- Outside markets: Energy Complex -0.05 at $73.70; Gold & Silver: -1.8 at
$1075.4 & +0.025 at $15.460; US $ +0.085 at $80.075

Cash Markets

-- CIF Corn steady up 1:  FH Feb. +51 to +52, Feb. +50 to +??, Mar. +48 to
+51, April +39 to +41, May +41 to +44, June +38 to +39, July +41 to +43,
Oct. +40 to +43

TREND:

Corn was supported better today with gains against beans and wheat. That
spreading held corn above unch all day. Volume in new shorts in ethanol
certainly look to be locking in hedge profits all the way through the summer
and into the fall. They have to buy corn as they sell ethanol---no more one
legged hedges for this industry. Feeders are also using this weaker corn
price to lock in feeding profits. All leads to scaled down buying when
farmer selling has slowed.

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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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