The corn market was lower on Wednesday as it continued to receive pressure from weather forecasts showing better planting conditions and pressure from outside markets. The July closed 11 cents lower and the December was over 10 cents lower with both closing right near the low of the day. The corn market felt pressure right from the beginning of the day but recovered in the middle of the session only to sell off again toward the end of the day. The current forecast has the western corn belt dry over the coming week and eastern corn belt receiving scattered showers. Corn also felt pressure from the crude oil market as crude oil closed $1.50 lower yesterday. Traders also pointed to active bean/corn spreading as helping to pressure corn as traders have been pushing that spread ever since the S&D report released last Friday was disappointing for corn. The volume was very small compared to the last couple of weeks and funds sold 5,000 contracts by the end of the session.

Overnight, the corn market continued lower as bulls are searching for any news to help support the market. Corn is finding some support from end users that are using the recent break to price some needs, but the funds and speculators are sending the corn lower. Weekly export sales today at 686,500 were within the estimates of 400,000 to 700,000 but it will probably be forgotten 3 minutes after the opening. Weather is the dominate factor for the corn market as we continue to have a forecast for warm/dry weather in the WCB and cool/wet for the ECB. The WCB will catch up in their corn planting and make a lot of headway in planting soybeans. Corn plantings are still way behind, but they are catching up fast, especially in the WCB. The outside market will be supportive today with crude oil up over $2.00, but I don’t know how much traders are paying attention to the outside markets right now. The bottom line for corn is weather and liquidation in front of better planting weather. This is NORMAL for this time of the year, it is just happening later than usual. We won’t get an accurate idea on acres planted or yields for months and traders are guessing right now, with both bulls and bears making valid arguments. Corn should open lower this morning and then look to try and find support, as we have seen fund liquidation the last 3 days which may be enough.

Globex Overnight

Contract Last Net Change High Low Volume

ZCK8 589^6S -7^6 598^0 586^6 1224 ZCN8 593^4 -2^6 597^6 590^0 6700 ZCU8 605^0 -3^2 609^0 602^0 404 ZCZ8 616^6 -3^6 622^0 613^4 4914 ZCH9 626^4 -6^2 633^0 626^2 94

Early Opening Calls: off 2-4 cents

Top News

-- Farm legislation in the US House passed on a 318-106 vote. The President has signaled he would veto the current $290 Bln, 5 yr bill approved by the House, but the Senate has yet to take up bill. -- Mexico's tortilla industry trade group estimates fuel prices & corn prices will likely press up tortilla prices by 18% to $0.95/kg by June from the current $0.80/kg. However the country's economics minister said the gov't is working w/ private companies to help keep prices from rising too much by offering financial assistance in the form of transport subsidies. -- UN's food organization FAO says ethanol use & lower US Corn planting will help support prices, they estimate a fall in US Corn production of 30-35 mln mt, while demand of corn to be used for ethanol up 20 mln mt. -- May 1 grain stocks in the Ukraine totaled 8.6 mln mt down from Apr 1 stocks of 10.2 mln mt -- Dalian Jan Corn futures fell 14 Yuan overnight. Settled at 1,944 Yuan/mt ($1=6.99 Yuan) -- Globex Corn Vol: 146,968; Pit Vol.: 15,741; Open Interest change: - 13,506 -- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip. The Corn Belt will see showers and thunderstorms today favoring the south and east. Friday looks dry. Saturday will see some light showers in the west. A slight chance of showers in the east Saturday. Dry Sunday. Temps normal to below. -- Outside markets: Energy Complex +1.20 at $125.42; Gold & Silver: +8.6 at $875.5 & +0.257 at $16.865; US $ is trading lower vs. Euro & Yen.

Cash Markets

-- CIF Corn steady off 1. May +16 to +18, June +24 to +26, July +35 to +36, Aug. +35 to +39, Sept. +38 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 again today.

Wheat got the break into new lows today and extended the weakness into the close. I had though that the market could rally back with so many still short in this contract. If we do not get a bounce tomorrow will have to come back to the short side.

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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