If the fund rebalancing exercise was having any impact on crop markets on its first day, it was hard to detect.

Raw sugar, which Morgan Stanley fingered as a major beneficiary of the annual revamp of index fund portfolios to match base index weightings, did rise, but only by 0.01 cents to 18.86 cents a pound in New York, for March delivery.

Meanwhile, Chicago wheat, seen as a loser of the rebalancing process, was lower, but by only 0.1% to $7.46 a bushel for March, while Kansas wheat, viewed a winner of the index fund rejig, also fell by 0.1%, to $8.03 ¼ a bushel, also for the March contract as of 19:40 UK time (13:40 Chicago time).

Sure, March soymeal, identified with sugar as a winner of the reweightings, did rise strongly by 1.6% to $405.40 a short ton.

But March soybeans were not far behind, adding 1.2% to $13.84 a bushel. And they were meant to be suffering a sell-down by index finds of $2.0bn, according to Morgan Stanley.

'Murky impact'

As Morgan Stanley cautioned, "the price impact of rebalancing is murky", given that other investors have so long to prepare and position for it.

Benson Quinn Commodities said that with liquidation so heavy in the run-up to the process, "with rebalances weighted by price, selling may be less than originally estimated in November with board prices now well below those earlier levels".

So what was keeping prices, generally, positive, even as many external markets, such as shares, flagged, hurt by the impact of new regulations on banks?

One help was the dollar, which fell back 0.3% as expectations of the US withdrawing easy monetary policy waned.  A weaker greenback makes dollar-denominated assets, including many commodities, more affordable as exports.

The surprise

But so was the prospect of a big report, in fact a series of big reports, from the US Department of Agriculture on Friday, including the flagship Wasde briefing on world crop supply and demand.

Caution over what the reports will bring prompted some covering of the short positions that speculators have been putting on in agricultural commodities (if not selling out altogether).

"Probably the surprise is that the average trade guess for US corn production is actually lower than the USDA's November number of 10.725bn bushels," Darrell Holaday at Country Futures said.

Ideas that the USDA might raise its estimate for the corn harvest gained traction last week, especially after Informa came up with a 10.8bn-bushel figure.

The market forecast instead, according to a Bloomberg survey, of a 10.625bn-bushel stat on Friday "is surprising given the break in prices we have seen the last three weeks", which appeared to imply investors thought corn supplies ample.

'Now competitive with Brazil'

In fact, ideas for US corn exports received a little bit of a nudge when the USDA revealed the sale of 102,000 tonnes of the grain, to South Korea.

Benson Quinn noted that "US corn values are now competitive with Brazilian, Argentine and Ukraine offers.

"This could attract some export demand for US over the next several weeks."

Market reaction was restrained by continued optimism over South American weather conditions, showing rain coming to needy areas of Brazil, and dryness to sodden parts of Argentina.

"The dryness in Brazil is limited to less than 10% of growing area," Paul Georgy, president at broker Allendale, said.

Still, corn for March stood 0.5% higher at $6.83 ¾ a bushel.

'Crush margins seen positive'

Soybeans were doing better in part because of more positive vibes coming from China, the top importer, whose cancellation of more than 1m tonnes in orders of US crop over the last month has been a major downer to prices.

"Chinese Dalian traders have returned from holiday with their markets firmer for beans in past two trading sessions," Benson Quinn noted.

"This is offering support to US market as Chinese soybean market did not sell off in catch-up with counterpart Chicago futures after being closed most of last week.

"Chinese crush margins are seen positive and are offering support."

'Somewhat promising'

China also offered some support for wheat, in the coldest winter for 28 years, which the official China National Grain and Oils Information Centre cautioned could hurt the winter crop.

Temperatures will fall to -5 degrees Celsius (23 degrees Fahrenheit) this week, according to the China Meteorological Administration, although it has to be said that wheat is typically viewed as being able to survive temperatures at that level pretty well, even without snow cover.

There is also growing speculation of European buyers turning to US soft red winter wheat, talk which has been around in the UK, hit by a dismal harvest last year, since the autumn.

But as for drought-hit US seedlings, the "midday GFS model is somewhat promising in regard to precipitation in a large part of the hard red winter wheat area later this week", Country Futures said.

"This has kept a lid on wheat rallies."

At least for bulls a series of banks, including Commerzbank and Societe Generale, voiced ideas that the price falls, especially in wheat, had gone too far already.