Has Dennis Gartman got it right?

The veteran commodity investor said he had, "until very, very recently", been "bullish of corn", and indeed had bought some March futures at $7.28 a bushel and $7.32 a bushel.

But that thinking changed on Friday, when the contract made a "near reversal". It closed lower, despite trading higher than the previous session managed at one point, but didn't tick every box in having its intraday low above Thursday's – rather than marking a true so-called "outside day".

Still, "action late last week, especially on Friday, when old crop traced out what looked very much like a textbook reversal to the downside, turned us to the sidelines", Mr Gartman said, adding that he would exit his position "at the market and immediately".

Risk appetite improves

That may hardly have been his most profitable trade, with Chicago corn for March closing down 0.7% at $7.29 a bushel.

But it was in tune with the downbeat sentiment on grains, which this session not only fell, but underperformed.

The average commodity, as measured by the CRB index, added 0.4%, helped by an easing dollar this time, whose depreciation improved the affordability of dollar-denominated raw materials as exports.

And share markets recovered well from early weakness, helped by news of Dell's $24bn buyout by a consortium including its founder, Michael Fell, and software giant Microsoft.

London stocks closed up 0.6%, while New York shares, as measured by the Dow Jones Industrial Average, were up 0.9% in late deals.

Weather update

Corn's latest drop was blamed by some on a change for the wetter in Argentina's weather forecast, although it was not clear that is supported by information seen by Agrimoney.com.

WxRisk.com talks of some models adding rain in northern Argentina in the six-to-10 day outlook, but further ahead, in the 11-15 day timespan, "the 12z GFS model has now shifted the significant rains from central Argentina northward", to areas including south eastern Brazil.

The model shows less than 0.75 inches over Santa Fe, Cordoba, Buenos Aires and Entre Rios, the weather service said.

Nearer term, MDA said that "with dry weather expected to continue through the weekend, soil moisture levels will continue to decline across the major [Argentine] crop areas, further increasing stress on corn and soybeans.

"Heat will be increasing late this week and this weekend, leading to additional stress on crops."

At broker Country Futures, Darrell Holaday said: "The models this morning were drier through February 16 in most of the Argentine production areas."

'Tighter than anticipated'

Indeed, soybeans, also highly sensitive at the moment to the South American weather outlook, managed gains, adding 0.4% to $14.95 ½ a bushel in Chicago, for March delivery.

Official data showing Canadian stocks of rival oilseed canola a little lower than expected at the close of 2012 - at 7.37m tonnes, a decline of 24% year on year and the lowest year-end figure since 2006 - were also seen as boosting values.

"Canola stocks were tighter than anticipated, and that number has provided some price support to the soybean complex," Mr Holaday said.

And ideas of strong export demand, boosted by Monday's US cargo inspection data, also helped

"Soybeans have a brighter picture as traders are looking for a pick-up in exports to China," Paul Georgy at Allendale said, adding that harvest delays and logistical hiccups meant the backlog of ships loading in Brazil, the main rival to the US for soy supplies, "is now estimated at 40 days".

Easier supplies

But, unlike soybeans, corn faces the prospect of an increase to US estimates for domestic  inventories when the US Department of Agriculture on Friday unveils its monthly Wasde report on world crop supply and demand.

"The trade is looking for nominal changes in US balance sheets with wheat and corn stocks expected to be slightly higher on lower export demand, while soybean stocks could be lower on better crush and export sales pace," Benson Quinn Commodities said.

While Morgan Stanley suggested mild support for corn prices from the livestock sector, on its analysis that US feeder cattle supplies, for fattening on feedlots, may not be as tight as some investors believe, ideas on ethanol were not so upbeat.

Richard Feltes, at RJ O'Brien said that analysts have flagged "a 12% marketing-year-to-date cut in ethanol production versus USDA's 10% cut", as currently forecast for 2012-13.

"Thus the corn ethanol category in Friday's crop report is subject to downward revision."

Another plant mothballed

Such ideas only gained further momentum from talk that Ag Processing Inc, a US co-operative, has temporarily closed a corn processing plant in Nebraska, citing "challenging economic conditions" in ethanol production.

This would appear to be in addition to the 36 US ethanol plants, out of 211, that have already been shut down as of January 29, according to the Renewable Fuels Association.

Nor did wheat help its fellow grain corn by closing down 0.7% at $7.57 ½ a bushel in Chicago for March delivery.

'US wheat would be competitive'

And this despite what might have appeared upbeat news, in Canada's stocks at the close of 2012 being pegged at 20.69m tonnes, 1.0m tonnes lower than investors had expected.

Furthermore, Russia announced its long-awaited decision to scrap its 5% import duty on wheat, although it will not come into force until April and last only until the start of July.

Still, it will in theory open the doors to imports from the US.

"With the import levy lifted, US soft red winter wheat would be competitive with Russian values even after the freight, although the demand may be for higher grade wheat," traders at a major European commodities house, with considerable Russian interests, said.

'Prospect for moisture improved'

However, wheat faced the setback not only of a potential upgrade in Friday's Wasde to the estimate for US stocks, but improved hopes for drought-tested US winter wheat seedlings.

"The prospect for moisture in the Plains has improved for the next seven days and that is driving wheat prices lower," Mr Holaday said.

"There is little doubt that today's weakness in being led by the wheat market."

In Paris too, wheat fell despite the prospects of easier shipments to Russia, with the March contract closing down 0.5% at E246.25 a tonne.

London's benchmark May contract shed 0.2% to £214.00 a tonne.

'Bulls are running out of time'

Among soft commodities, raw sugar failed to hang on to early gains, sapped by a stream of bearish talk from the Dubai sugar conference.

"The medium-to-long term consensus for the market seemed to have 16 cents a pound targeted by many at the conference," Thomas Kujawa at Sucden Financial said.

And shorter term, "it seems that the bulls are running out of time to generate some upside momentum to flush the funds out of their 75,000-lot short" position in raw sugar, as estimated by the market consensus.

New York raw sugar for March closed down 0.9% at 18.56 cents a pound.

Sweet-toothed pirates?

But cocoa gained ground, adding 2.4% in London to £1,468 a tonne for May delivery, amid fears of pirate activity, and deteriorating weather, around Ivory Coast, the top producing country.

Suspected Nigerian pirates have hijacked a French-owned, but Luxembourg-flagged, tanker with its 17-member crew off Ivory Coast.

New York arabica coffee for March lost 0.2% to 144.05 cents a pound, pressed by a small upgrade by the International Coffee Organization to its estimate for world coffee production in 2012-13.