The corn market sold off aggressively on Tuesday as it seemed traders wanted to make a run at corn and get it out of the way?? There continues to be talk of better planting weather and the corn market is not getting any bullish news. The forecast for better weather is taking some of the risk out of corn prices. Traders see better weather this week as allowing farmers to really catch up, as one trader said, if we caught up 24% last week, we can probably catch up 30% this week which will take the risk premium out of the corn market. The July and December corn closed about 7 lower, but well off the lows made early in the session when most of the corn contracts were down over 20 cents. Traders said the initial selling pressure was probably too aggressive, but on the other hand, corn needs some new positive news to get up and going again, especially this time of the year. The outside markets were mixed with the crude oil up $1.50, but the US$ was stronger. Volume was moderate at app. 270,000 contracts and funds sold 9,000 contracts.

Overnight, corn was lower again as traders are still looking at the better crop planting weather forecast this week and weekend allowing farmers to catch up significantly, especially in the western corn belt. The July and December were both down 4 cents on the lows at the end of the session as corn traded unchanged to negative all night. The corn market is under pressure because of the better weather forecast and that is taking the risk premium out of the corn market. Most traders will tell you they are bullish corn medium to long term, but short term, it could find face some pressure. The bulls want to talk about farmers having to switch to shorter maturity corn which has a 10-20 lower yield average because the corn is going in so late and bears want to talk about yields not necessarily being lower because corn was planted late, yields are determined later in the summer, so it has plenty of time to recover and the weather may be fine in 2 months. Who is right? Weather and the ending stocks report from last week are what is leading corn right now and corn should have trouble moving higher unless we get a piece of good news, such as a lower crop progress report on Monday afternoon. Weekly export sales will be released tomorrow morning, but these have been largely ignored by the market lately. The weekly export sales have been weaker at these prices and it looks to continue right now. Opening calls will be 3-5 lower and the corn market will look for support and to see if funds try and go after the lows from yesterday.

Globex Overnight

Contract Last Net Change High Low

ZCK8 596^6 -0^6 598^0 596^6 ZCN8 603^2 -4^0 607^6 603^0 ZCU8 615^6 -3^6 619^6 615^6 ZCZ8 627^0 -4^0 631^2 627^0 ZCH9 642^0 -0^4 643^0 641^2

Early Opening Calls: off 2-4 cents

Top News

-- Analysts expect the French grain stats office, ONIGC, to lower its Corn ending stocks to 2.97 mln mt -- Group in Israel seeking 48,000 mt of US or S American Corn at Wednesday tender, shipment was expected in August -- Forecast output of Corn by China's Nat’l grain stats center was unchanged from last estimate of 149 mln mt -- After passing EU food safety muster, the Euro Commission will vote whether to lift the ban on US poultry imports on May 28th. US poultry official says the industry hopes for a positive vote & if so expects exports to EU to resume by October 2008 -- 100,000 mt of barley tender was issued by Jordan's state grain buying arm on Monday, the bid deadline is May 20th. 50,000 mt are expected for LH June & the other 50k mt are expected in FH July -- Turkish media is reporting that its state grain board has said it will soon tender for import of 150,000 mt of Corn. -- Dalian Corn futures settled lower in overnight trade, down 11 to 1,958 Yuan/mt, traders suggest hard earthquake hit pork breeding/production areas could result in lower feed demand -- Globex Corn Vol: 236,811; Pit Vol.: 29,049; Open Interest change: - 12,502 -- Weather: 6-10 Day Forecast: Below Normal Temps. Below Normal Precip. The far eastern Corn Belt will see some showers and thunderstorms today. Southern and eastern areas see chances of showers Thursday. Friday into Monday looks dry. Temps normal to below. -- Outside markets: Energy Complex -0.39 at $125.41; Gold & Silver: -1. at $868.3 & +0.040 at $16.868; US $ is trading slightly better vs. Euro & is better vs. Yen.

Cash Markets

-- CIF Corn up 1 to 6. May +16 to +20, June +24 to +27, July +34 to +37, Aug. +35 to +39, Sept. +37 to +43,Oct. +39 to +43, Nov. +39 to +43, Dec. +42 to +46

TREND:

Corn into support and no reason to press the short side. Encouraged users to add to length today.

Wheat is still flirting with a break into new lows under the 7.90 lows in Jly. Market already short here so do not expect any major promise when this market moves into new lows---corn should continue to gain on wheat in spite of short term signals that the spread is tired.

If you have any questions, or if you would like to discuss specific trade recommendations on any markets, contact me directly.

Jim Riley Linn Group 877-787-6278 jriley@linngroup.com

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