U.S. corn futures rose above $5 a bushel on Thursday, October 19, hitting their highest level since August, while soybean futures hit a 4-week high.

Apparently, grain markets were boosted by a severe drought that disrupted grain shipments and slowed soybean production in rival exporter Brazil, while rising crude oil and a weaker dollar also boosted agricultural sentiment. In addition to a most recent positive U.S. export sales report, there are signs demand for U.S. corn is growing as a likely response to expectations of higher oil prices going forward (corn is used for production of ethanol).

Commodities analysts said fund traders held large short positions heading into the weekend to prepare for unforeseen developments in the Israel-Gaza conflict. CBOT corn for December delivery (C_1:COM) closed 2.7% higher at $5.05 ¼ a bushel after hitting its highest price since August 21 at $5.05 ½, while December wheat (W_1:COM) also closed up +2.4%. In its last Traders Report, the CFTC noted that commodities funds traders held a net short position of over 150,000 contracts for wheat, and over 110,000 contracts of corn, which are now seemingly fizzled.

Right now, technically speaking, although $5 level was effortlessly pierced, it faced, as usually, quite sizable resistance. This Friday will likely be a pivotal day in defining this emerging trend.