The corn market closed lower on Tuesday as the outside markets seemed to trump the bullish fundamental news the market was getting. The September and December contracts closed down 5 and 6 cents on a day where the highs and lows were put in the first 30 minutes of the day and then the market seemed to just flop around the rest of the day. The outside markets, specifically the US$ seemed to be the reason for the break in the corn market and also just a quiet day with the lack of any major buying and/or selling. Traders want to point to fund money coming out of the commodity markets and that helping to add to the sell off in the corn market. Hurricane Gustav looks to be heading toward the Gulf Coast and is helping to support the energy markets, but grain traders are mixed on whether or not this will help or hurt the grain markets. On one side, the higher energy prices should help the grain markets, but if it hits the gulf coast, it should bring some much needed rain up into the Midwest next week. But, as one trader said, it is crazy to be trading grains today on Gustav with it expecting to hit landfall on Monday. Volume yesterday was app. 240,000 contracts and funds were net sellers of app. 5,000 contracts.

Overnight, the corn market was higher as the energy markets were stronger overnight and traders maybe are finally paying attention to the lack of rain across most of the Midwest and the repercussions on yields. The crop condition report on Monday after the close should have been supportive but wasn’t, so that is telling the market they either don’t believe the reports or the funds have more control than the market. The US$ was weaker overnight, helping the grain markets higher, but it has come back off its lows from last night. The bottom line is I don’t think much has changed in the grain markets and with light volume, you will see some extreme moves, but it will be difficult extend new highs and new lows. We look for the corn market to open higher today with the energy markets, but don’t look for these markets to be able to hold unless energies really take off to the upside. The weather forecast still has restricted rainfall across the Midwest, but some areas are getting much needed rains and there are many traders/analysts that are just waiting to sell the corn market.

Globex Overnight

Contract Last Net Change High Low Volume

ZCU8 581^0 5^6 585^2 575^0 684 ZCZ8 599^2 5^2 604^4 594^4 6127 ZCH9 620^0 6^4 623^0 613^0 97 ZCK9 633^4 7^4 634^6 630^6 22 ZCN9 641^0 5^0 644^6 638^4 71

Early Opening Calls: 5-7 cents better

Top News

-- The S African Corn crop estimated harvest has risen to 12.0 mln mt up from the grain estimating committees prior estimate of 11.6 mln mt -- An ag industry publication poll said farmers are not giving up corn acreage in 2009 and plan to plant 5% more soybean in 2009. The additional soybean acreage will come at the expense of winter wheat, acc. to Farm Futures commentary. -- Weather concerns Morgan Stanley analyst to keep 2008 corn and soybeans price estimate at $7. & $15, respectively -- Pending Tender: 20,986 mt of food grade Barley is sought in a Thursday Aug 28th SBS tender to be held by Japan's ag ministry. The ministry on Tuesday announced 20,000 mt of the total sought would be bulk-based, while the balance should be container based -- Dalian January corn futures on Wednesday rose 11 Yuan to 1,746 Yuan/mt, other contracts were also higher -- Globex Corn Vol: 204,916; Pit Vol.: 18,909; Open Interest change: - 13,848 -- Weather: 6-10 Day Forecast: Above Normal Temps. Normal to below Precip. The Corn Belt will see some showers today favoring the north and west. Thursday will see a few showers in the west. Friday into Sunday looks mostly dry. Temps near normal. -- Outside markets: Energy Complex +1.16 at $116.27; Gold & Silver: +6.8 at $830.9 & -0.052 at $13.516; US $ is trading slightly lower vs. Yen & is trading lower vs. Euro.

Cash Markets

-- CIF Corn steady up 4. Aug. +58 to +63, Sept. +56 to +60, Oct. +46 to +48, Nov. +48 to +52, Dec. +53 to +55, Jan. +38 to +40

TREND:

Wheat is now below the last 5 days trade and feeling very weak. Cash has softened in both hard and soft red. This market certainly looks to be headed weaker. Support at 8.40 in WZ held today but should eventually come out.

Corn stayed weak all day pretty much confirming the outside day reversal from yesterday but could not muster any serious weakness? Look for CZ to be supported at 5.70 to 5.60.

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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