The Santa seasonal came good, eventually, after all, although investors hoping for some of the hefty gains corn and soybeans have shown in the past in the days before and after Christmas went home disappointed.

Not that gains were easy on a somewhat negative day for financial markets, in which seasonal cheer was undermined by concerns over the US fiscal cliff, and the lack of progress yet on US budget negotiations between Democrat and Republican politicians which would avoid falling over it.

Wall Street shares eased 0.4%, as did commodities as a whole, as measured by the CRB index.

Short covering?

Against that background, Chicago soybeans' rise of 0.5% to $14.35 ¾ a bushel for March delivery looked a little more creditable.

Corn for March gained 0.3% to $7.04 ¼ a bushel.

Some of this was attributed to short-covering ahead of the holiday, as investors took profits on short positions which have proved profitable bets of late, as corn, soybeans and wheat have hit multi-month lows.

The extent of short positions in corn and wheat especially was highlighted in weekly regulatory data which showed speculators turning net short for the first time in six months – raising indeed ideas that hedge funds may be wary of putting on more bets on losing prices.

'Drier trend'

But there was some fundamental reason for concerns, with weather in South America OK, but not at the ideal levels some investors seemed to be pricing in last week.

Although forecasts are pencilling in rains for northern Brazil, "the drier trend there merits some attention", Benson Quinn Commodities said.

Meanwhile, "portions of Argentina are expected to see moisture over the course of the next couple of days", the last thing that sodden fields need, although "a drier pattern should be present late in the week".

'Commercial buying'

And, as an extra boost, there are growing signs of end-users taking advantage of lower prices to make purchases, US Commodities said.

"Commercial buying has been helping to support grains off the big break last week," the broker said.

On exports, US cargo inspection data due on Wednesday, which require  a weekly rate of only a modest 18.3m bushels to reach US Department of Agriculture forecasts for 2012-13, "are expected to be bullish".

'Extended period of dry weather'

Chicago wheat meanwhile gained 0.2% to $7.93 ¾ a bushel for March, helped by the extent of the net short position, and by some ideas that rain in the US Plains, where winter wheat seedlings are struggling with dryness,  will not prove plentiful.

"Light rain/snow is expected to fall in portions of the southern Plains," Benson Quinn Commodities said.

"This event is expected to be followed by another extended period of dry weather, while temperatures are expected to cool off considerably."

In Paris, March wheat added 0.4% to E254.50 a tonne, but London wheat for May, in minimal volumes, dropped 0.6% to £213.85 a tonne.

Mixed softs

Among soft commodities, New York arabica coffee bought into the gains, adding 0.3% to 147.00 cents a pound for March, helped by a more positive stance to the bean from Barclays.

Barclays cited prospects for a weaker Brazilian harvest next year, and the potential for a rash of short-covering of speculators lofty net short position in the bean.

But New York raw sugar for March dropped 1.2% to 19.02 cents a pound, undermined by confirmation of shipments by India, which unveiled a formal export order.