The corn market closed slightly higher ahead of the USDA report tomorrow morning. The July and December closed up about 2-3 cents which was near the highs of the day, but really in a tight trading range of only about 6 cents. We saw mostly two sided trade ahead of the report as traders don’t want to take on too many positions in front of the report. The USDA report tomorrow morning before the opening will give us our first indication of any changes in acres and/or yields from the March 30th report. We also have the end of the quarter and end of the month tomorrow on top of the crop report, so it could be a very busy day tomorrow as many traders won’t want to do too much on Monday ahead of the report. A survey on analysts have on average the acres dropping from 84.986 back in March to 84.158 mil acres. There is a pretty wide range of estimates and the current theory is the reduction in corn acres won’t be as big as many were predicting a couple of weeks ago. The weather forecast across most of the Midwest continues to look great for crop development and bearish prices. The current forecast has cooler weather the next week or so with a good chance of rains. This follows the hot/dry weather much of the area has had the last 10 days which has helped late planted crop catch up and the early planted crops leap ahead. The volume was decent at 263,000 contracts and funds were small buyers of about 4,000 contracts.

Overnight, we saw corn close about 2 cents lower in a pretty tight trading range of about 4 cents. The corn market is probably in a 2 sided trading range today as the market awaits the USDA report. The outside markets overnight were mixed with crude and stocks trading higher this morning and the US$ about unchanged. This is a holiday shortened week with the 4th of July being recognized on Friday. Also, starting Wednesday, the grain markets will trade until 7:15 am CST instead of the 6 am close, so it will be interesting to see if grains have more volatility as most traders will be up and watching the last hour of trading. Corn this morning will be called unchanged to slightly lower and I would expect a relatively quiet trading day ahead of the report, but it is the end of the month and quarter tomorrow, so we could see some fund activity starting today, but the voice of reason says to wait until tomorrow for positioning. After the release of the report tomorrow, option volatility takes a hit as the report is now behind us and we have a big piece of the puzzle with the acre number. I wouldn’t expect much from corn today except if it gets much higher, it will find active selling.

eCBOT Overnight

Contract Last Net Change High Low Volume

ZCN9 382^4 -1^6 384^4 380^0 2318 ZCU9 389^6 -2^0 391^6 387^2 1564 ZCZ9 401^2 -3^0 404^0 399^4 5166 ZCH10 413^6 -2^2 416^0 412^0 91

Early Opening Calls: Corn 1-3c Lower

Top News

-- Analysts expect Tuesday's USDA quarterly Jun 1 grain stocks of Corn at 4.20 bln bu.; Soybean stocks at 585 mln bu; Wheat stocks at 670 mln bu -- In Tuesday's USDA acreage report analysts expect Soybean acreage at 78.1 mln acres; Corn acreage at 84.2 mln acres; Cotton acreage at 8.80 mln acres. -- USDA Ag Sec says credit crunch has put the ethanol industry in tenuous position -- USDA Ag Sec says he's stayed in contact with Sen. Ag Chmn about Congress ensuring commodity market speculation helps those markets rather than hinder price signals, he made those comments during a Reuters interview -- Minister of Trade for Canada say he hopes his country can increase exports of ag goods to Saudi Arabia by 40% this year. -- Farmers in Hungary say recent precip has hampered the barley harvest, but improved the outlook for corn plantings -- The lower House of the Argentine Congressional race shows the President's majority was lost in weekend elections, while her husband also lost a high profile race in mid term elections -- Dry weather, lack of pasture, & potential for winter feed shortage prompts Alberta, Ca trade group to suggest ranchers will thin the herd by between 10 -25% this year to stay in business -- CME announced June 5th that electronic trading hours for the CBOT grains, oilseeds and ethanol contracts will be expanded in the morning by one hour and fifteen minutes, until 7:15 a.m., beginning July 1. -- CME Group to begin Latin American Commercial Incentive Program in August to help rally reduced cost electronic trading for Latin American Ag Products on the CME & CBOT. -- Dalian Jan Corn Futures unch at 1,627 Yuan. ($1=6.83 Yuan) -- LIFFE Nov Corn Futures up +3.00 euro to 142 euro/mt -- eCBOT Corn Vol: 221,878; Pit Vol.: 26,324; Open Interest change: -25,361 -- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Above Precip. -- Outside markets. Energy +0.70 to 69.86; Gold & Silver: +1.6 to 942.6; US $ Slightly better than the Yen and Euro

Cash Markets

-- CIF Corn steady off 1. June +46 to +49, July +49 to +52, Aug. +49 to +52, Sept. +54 to +56, Oct. +46 to +49, Nov. +47 to +49, Dec. +49 to +52, Jan. +42 to +44

TREND:

Look for the trade to slow on Monday---only day of trade left prior to the report on Tues AM. May see some spread trade as the market prepares for deliveries as well. Flat price remains under pressure. See no reason to change the targets but the crop report puts a new element into the trade. Would like to be clean and out of spec positions prior to the report so we can react to the new developments.

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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