Wednesday turned out to be one of those days when agricultural commodities recovered a little bit of the initiative against shares.

Shares have stolen a lead, setting multi-year highs in a range of markets, after 2013 has brought an end to the "risk-on, risk-off" trades, in which all risk assets appeared to be moving as one.

But even while stocks gave back some gains, falling 0.8% in New York, after minutes showed the US central bank mulling pulling back on ultra-easy monetary policy, agricultural commodities showed gains.

That contrasted with a 0.6% drop in commodities as a whole, as measured by the CRB index, and defied a 0.7% rise in the dollar, fuelled by the idea of lower risk of US currency debasement.

A strong dollar makes assets denominated in it, including many raw materials, less affordable to buyers in other currencies.

'High level of buying interest'

Still, there was reason for firmness in many ags, including talk in many of strong Chinese buying since the country returned from its lunar new year celebrations.

Cotton was one such crop, fostering a rise of 0.4% to 84.46 cents a pound in New York's best-traded May contract, the lot's best finish since May.

"Following China's return to the market, a high level of buying interest is anticipated from the country," Commerzbank said, adding that more would be known on this with weekly US export sales data, on Friday.

"Also driving the price up is the expected cut in US acreage due to the fact that the cotton price underperformed last year as compared with other agriculturals."

More will be known on that later this week too, when the US Department of Agriculture unveils its first formal crop forecasts for 2013-14.

Preliminary data revealed last week showed acres falling nearly 25%.

Soybean purchases?

China is also believed to have been in the market for US wheat, notably soft red winter and hard red spring varieties, with talk a volume of 350,000 tonnes doing the rounds. (It has also bought an estimated 400,000 tonnes from Australia and 100,000 tonnes from Canada.)

Such purchases would lend further weight to ideas that China's wheat harvest last year was nowhere near as large as official data show.

And "there is a lot of talk continuing about Chinese purchases of US soybeans", Darrell Holaday at Country Futures noted.

Richard Feltes at RJ O'Brien said that the talk was of China buying up to eight cargoes of US soybeans, to replenish port stocks which have fallen to 4.9m tonnes from some 6m tonnes a year ago, and ideas of a drop below 4m tonnes if demand from crushers stays strong.

US Commodities said: "At this pace of US exports, the south east US will need to rely partly on soymeal shipments from Brazil in midsummer."

'Back-up in Brazil loadings'

This Chinese demand was, in the investor timetable, supposed to have transferred to South America.

But a rainy early harvest, and logistical problems, including a strike threat, have dealt a blow to that idea.

"Logistics concerns in South American continue to foster very real ideas of additional demand for old crop US soybeans and soymeal," Benson Quinn Commodities said.

"The relatively slow pace of the early soybean harvest, wet conditions at port locations and inefficient infrastructure have limited the ability to load a vessel line up that continues to grow."

US Commodities said: "The back-up in Brazil loadings has now bubbled to the top - 7.7m tonnes of grain is lined up to load at the ports."

'More dock worker problems'

Even if soybeans do get to port, the perennial risk of industrial action has risen to the fore, with port workers nationwide planning strikes on Friday and Tuesday.

"Brazilian dock workers boarded a ship and stopped it from unloading modernised cranes - they are concerned that modernisation of port facilities will cost them union jobs," Paul Georgy, president of US broker Allendale, said.

"Brazil will likely see more dock worker problems in coming weeks."

Furthermore, Argentina suffered yet another downgrade to its crop, this time to below 50m tonnes, with Lanworth pegging the crop at 49.6m tonnes, 21.0m tonnes below its estimate two weeks ago, and only offset a touch by a 700,000-tonne upgrade to 81.0m tonnes in the forecast for Brazil's harvest.

"Rapidly declining or suppressed crop vegetation density evidenced by imagery indicates continued risk to South American soybean production," Lanworth said.

That said, the analysis group offered bears some scraps too by coming in with a figure for this year's US soybean harvest which, at 3.47bn bushels, was 4% higher than the USDA's preliminary estimate last week.

Harvest results

This forecast depended on an estimate of a hefty 81.4m acres in sowings.

Furthermore, not all the news from South America was price positive, with RJ O'Brien's Richard Feltes noting that yields from Brazil's early harvest "so far are tracking near average with 22% harvested, on par with last year's brisk pace. 

"Rio Grande do Sul crops benefited from widespread and measurable weekend rains."

Chicago soybeans for March ended up 0.9% at $14.82 ¾ a bushel, but nearly $0.10 below their intraday high.

'Needs to get its hands on corn'

Corn managed a third successive gain, helped up by soybeans (and wheat), but also by the firm US cash market.

"Strong corn basis levels continue to point to the market needing to get its hands on corn," Country Futures' Darrell Holaday said.

In Decatur, Illinois, the basis "went to a record publicized basis of +$0.40 a bushel.

"That means that the real basis to buy any quantity is probably +$.50-0.60 a bushel, and that is  probably not going to prompt a substantial amount of cash movement."

Chicago corn for March ended up 0.8% at $7.00 ½ a bushel, returning to finish above $7 a bushel for the first time in more than a week.

Egyptian purchase

Wheat, meanwhile, gained not just on China purchase rumours, but an actual Egyptian order, if of a modest 60,000 tonnes.

This was purchased from Venus at $296.75 a tonne, plus freight of $28.85 a tonne.

And signally, there were no offers of supplies from other origin – taken as a sign of tightening supplies in other origins, certainly supplies able to compete with US values depressed by the grain's slide to seven month lows earlier in February.

"Egypt bought some US soft red winter wheat and that has been very supportive," Mr Holaday said.

'Built into the market'

Sure, rains are proving much-needed moisture for drought hit winter wheat areas.

"The Plains blizzard will be beneficial to wheat," Mr Holaday said.

"But much of that has been built into the market," he said, adding that the GFS weather model is after the current moisture "not indicating any significant rain in the next six-to-12 days".

Chicago wheat for March closed up 0.9% at $7.38 ½ a bushel.

'Risky strategy'

Back in New York, raw sugar for March added 0.7% to end at 18.35 cents a pound, putting a little further distance between itself at a two-year low of 17.87 cents a pound reached last week.

The sweetener is gain support from nerves among investors who have a near-record net short position on the sweetener, at a time when the low prices are raising ideas that large amounts of cane will go to producing ethanol instead.

As Macquarie noted last week, "there is a strong chance that funds retain their [sugar] short positions in this market," given prospects of a large Brazilian cane crop this year.

"But this is always a risky strategy in sugar, with so many weather and other variables."

New York arabica coffee soared 2.3% to 141.65 cents a pound for the May contract, recovering from its own two-year low, amid growing fears for the impact of roya fungus on Central American supplies.