Corn Rallies on Short Covering, Technicals

I thought it was something Komrade Obama said last night, but apparently corn's rally today was due to short covering and buy orders that kicked in on the rally.

According to my broker, corn still sits about $.50 below the cost of production. I've read that for the most part, most grains and softs are currently sitting either below or just at their respective costs of production.

Reading this article reminded me that I completely forgot to roll my 2 March corn contracts - a couple more days and we might have seen a big old truck from Iowa pulling up at my doorstep to drop off a special delivery. Boy the wife would have loved that one.

So I just rolled them, but only picked up 1 May.

CBOT Corn Review: Surges; Short-Covering, Spread Unwinding

Corn Prices Rising Without Any Good Explanation

Caught this piece in today's WSJ - the recent rally in corn prices had many analysts scratching their heads after a record corn harvest.

After today's USDA report, corn prices are looking quite vulnerable in the near term, even after closing "limit down" today.

Stratfor: Fall in Food Prices Likely Temporary

Stratfor reports that the current drop in food prices is likely to be temporary, because falling prices and the credit crunch will reduce supply next growing cycle.

The article confirms something we've been discussing here at length - the trends which originally brought about the supply/demand imbalance in the grains markets are still firmly in place, and that these supply constraints will remain until there is a large structural change in supply or productivity.

New Gov't Solution for Food and Energy Crisis

Shout out to my buddy Chihab for finding this gem.

Top 10 Ethanol Producing Nations

Daily Wealth: The Bull Market That's Killing Domino's Pizza

Article in today's Daily Wealth about how the bull market in commodities is hurting the fortunes of food companies.

Summary:

• Gov't mandates for corn-based ethanol have driven up all grain prices
• For the forseeable future, consumers will pay more for food
• The stock prices of food producers have been hammered, as they struggle to deal with rising costs