How far does a dead cat bounce? Higher in a soybean pit that a wheat one, if dealing on Friday is anything to go by. (And especially when a dog does not bark.)

Many markets struggled against heightened concerns that politicians in the world's biggest economy will not be able to agree on a budget, meaning the triggering of measures otherwise known as the "fiscal cliff".

Not only can Democrat and Republican politicians not agree on a deal, but it appears there are splits among Republicans too.

"A fiscal cliff resolution before December 31 remains unlikely in our view, and continued US political deadlock is likely to place further downward pressure on risk-sensitive assets into year end," Barclays Capital said.

Wall Street shares stood 1.0% lower in late deals, with stocks in London ending down 0.3% and Frankfurt 0.5%, with Brent crude down more than $1 a barrel too.

'You pick the explanation'

However, many agricultural commodities managed gains, outperforming too a small drop, of some 0.1%, in the CRB commodities index.

Not that many investors were getting too hopeful that a renewed rally is round the corner.

"Short covering rally, dead cat bounce, or just oversold. You pick the explanation today for the higher market," Darrell Holaday at Country Futures said, with none of the alternative appearing causes for optimism over sustained gains.

"A dead cat bounce is occurring," US Commodities said, a reference to the financial market idea that even a deceased moggie will rebound if dropped from a big enough height.

'In need of a catalyst'

There is a feeling that for more sustained gains it will, as Allendale's Paul Georgy said, "take a report of some confirmed sales to convince buyers to come back to the table.

"Disappointing weekly corn sales and a negative technical picture is continuing to weigh on the corn futures," after all.

US Commodities said that "the market is in need of a catalyst to move higher - usually it occurs from demand in these types of markets".

And there is hope. "End-user buying is starting to develop. US wheat is now under the French and Indian wheat values," even if, on corn, Brazil "continues to offer below US values".

'Great deal of liquidation'

Not that there was too much in the way of export activity announced on Friday.

But one factor enabling the dead cat bounce was a dog not barking – the US Department of Agriculture avoided another announcement of Chinese soybean buyers cancelling US orders, of the type which scared investors particularly on Thursday.

"The soybean cancellation by China of 540,000m tonnes of soybean imports caused a great deal of liquidation," US Commodities said.

"However, export sales still remain at 83% of the expected total for 2012-13" already, with the season less than four months old.

Rebalancing act?

Furthermore, bulls gained comfort from a growing idea emerging that fundamentals are not so much to blame for the drop in grain and oilseed values, but a technical factor – preparations for index fund rebalancing.

This is the exercise, associated with early January, in which tracking funds adjust their portfolios back the index they track – meaning selling top-performing commodities, and buying laggards.

And the revival in futures could be a sign that investors positioning for the rebalancing got ahead of themselves.

"Funds have been sellers this week on technical weakness and month-end, quarter-end, year-end liquidation," Benson Quinn Commodities said.

"Selling could also be attributed to pre-positioning ahead of next month's index fund rebalance," which is expected to see sales of nearly 76,000 Chicago wheat lots, 11,000 on corn, and 44,000 on soybeans.

They will also sell some 15,000 soyoil lots, while buying 24,000 Kansas wheat and 61,000 soymeal contracts.

'Soybean leadership'

Whatever, Chicago saw a round of positive finishes, including in wheat, which added 0.2% to $7.92 a bushel for March, and corn, which for March gained 0.8% to $7.02 a bushel.

Soybeans, which have suffered particularly in the last previous three sessions, gained 1.5% to $14.30 ¾ a bushel for January delivery, and 1.7% to $14.29 ¼ a bushel for March.

Soymeal for March gained 1.5% to $425.00 a short ton, and soyoil for March 1.7% to 49.12 cents a pound.

"The leadership upward is in the soybean complex, but that is primarily because of the extreme weakness since mid-week," Country Futures' Darrell Holaday said.

'More moisture in the Plains'

Kansas hard red winter wheat for March missed out on the rally, easing 0.2% to $8.42 a bushel.

But then ideas are growing of moisture to refresh drought-hit Plains crops.

"The midday GFS model is a little more lenient with some moisture in western Kansas at midweek next week and also indicating more moisture in the Plains out 10-14 days," Mr Holaday said, if highlighting the difficulties of accurate forecasts.

"Remember, at one time early this week the GFS indicated heavy moisture next week in the southern Plains. That has dwindled to a chance of minor precipitation."

'Licensing is still pretty strong'

Paris wheat for March did far better, rebounding 2.1% from a five-month low to E253.50 a tonne, getting further help from decent weekly EU wheat export data on Thursday of 566,000 tonnes.

"This week's licensing is still pretty strong as we head into the Christmas break," Rory Deverell at broker FCStone said.

"It will be interesting see the pace of exports as the US are now firmly in the picture going forward for the coveted North African and Middle Eastern export markets."

London wheat for May added 1.9% to £211.00 a tonne.

Coffee revives

Among soft commodities, New York arabica coffee continued its revival, adding 2.8% to 146.60 cents a pound for March, as Brazilian officials added to ideas that speculation may have driven prices artificially low – and with ideas of further finance to help farmers hold off selling inventories for now.

However, cocoa extended its decline, dropping 0.2% to £1,477 a tonne in London, for May delivery, taking losses for this week nearly to 5%, depressed by ideas of recovering West African supplies.

Raw sugar for March held at 19.25 cents a pound, in line with a Rabobank report which said that the sweetener was set to get support from a switch by Brazilian Centre South mills to turning cane to ethanol – but not yet.