The corn market was lower on Friday as the rumors finally were confirmed and the market ran into the old buy the rumor, sell the fact. The May/July contracts closed down about 12-13 cents which was almost 28 cents off the highs and the December closed down about 9 cents which was only 13 cents off the highs. The corn market opened stronger than expected and some were worried the market would run up and trade limit up, but it never came close and then it seemed traders were selling and taking profits, especially with the USDA report on the horizon and everybody wanting to limit positions. After opening strong, the corn market moved lower and traded down about 10 cents and traded in the lower end of the range until the final minutes of the day and then we had a spike lower of about 5-6 cents to end the session. Traders are naturally nervous about the volatility of the USDA report which will be release on Thursday before the opening. The corn market had been very strong earlier in the week and was due a break and the confirmation of a big export trade was reason enough to take off positions. The USDA announced sales to unknown destinations which is assumed to be China. The volume was 384,000 contracts and funds were sellers of about 10,000 contracts.

Overnight, the corn market closed about unchanged, slightly higher which was toward the bottom of the range. The corn market opened and traded higher most of the night on a relatively quiet session as the outside markets were quiet as well. The news of the corn sales to unknown destinations is in the market, so traders will begin to focus their attention on the USDA report on Thursday and we will probably see more liquidation of positions. The option volatility was up over 3% on Friday and we will continue to see this increase or stay at very high levels into the report because of the surprises we have seen over the last year in the USDA reports. The corn market is getting some support from the cold/wet weather across the Midwest and that weather is expected to stay the same for the next week to 10 days. There was some talk of another big sale that could be announced this morning from the USDA, but nothing confirmed yet. The corn market will be called to open about unchanged today, maybe slightly higher as the outside market have gotten more supportive since the grains closed. It is all about the USDA report the next 3 trading days and not about the outside markets or news unless there is China news.

Globex Overnight Contract Last Net Change High Low Volume ZCK11 690^2 0^6 694^6 689^2 10174 ZCN11 696^6 1^2 700^4 695^0 3855 ZCU11 649^2 4^4 651^0 646^0 546 ZCZ11 610^0 0^4 615^4 608^0 3221

LaSalle Street News Early Opening Calls: 1-2 cents better

LaSalle Street News Top News -- Dalian Jan. Corn futures were down -11 @ 2,407 yuan/mt. -- Liffe Jun. Corn futures were up +1.00 @ 225.25 euros/mt. , Aug. up +.25 @ 226.50 euros/mt. -- Globex Corn Vol: 348,736 ; Pit Vol: 24,260; Open Interest change: - 1,295 -- Weather: 6-10 Day Forecast: Below Normal Temps. Normal to Above Precip. -- Outside markets: Energy Complex -1.33 at $104.07; Gold & Silver: -12.6 at $1413.6 & -0.459 at $36.590; US $ +0.170 at $76.655

LaSalle Street News Cash Markets -- CIF Corn steady off 2. Mar. +?? to +54, Apr. +56 to +60, May +60 to +63, J/J +60 to +64, Aug. +95 to +1.00, Sept. +49 to +55, O/N +55 to +57

TREND: There is no doubt that the corrections in Nov and Mch have served to rejuvenate the consumer. Every time it appears we are about to put some feeders or ethanol plants on the auction block to pay debts the market breaks and gives everyone a chance to take on coverage? There is no doubt we are trading very highs price levels but it appears that the demand has not been abated by it. We have seen feeders convert to alternatives when give the chance and that may have cut consumption some in one area while the profitability in another jumps up to increase consumption there? The extreme volatility will not go away---here for another 6 months at least. Do what economics dictate right now. Huge risk in the coming year if users do not take coverage but the market seems to give plenty of opportunities if you do not get greedy. No one needs to take on total coverage if margins are not there. Farmers have taken the insurance guarantees to heart with near record signup at higher levels of coverage. The fact that the markets were limit down on the last day of signup may have been all the encouragement needed? This provides a put to the down side for a major share of the crop. For what is uncovered, we encourage a scaled trade buying put spreads and selling calls. Next order for some clients is at 15 cent credit on CZ 600-500put spread vs. selling a 700 call.

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