Wheat futures started the week by regaining a $2-a-bushel premium over corn, helped by a run of short-covering.
In fact, short-covering was a bit of theme in agricultural commodity markets.
It helped arabica coffee for December post gains, adding 2.1% to 117.05 cents a pound in New York, helped by ideas that talk of a boost to Brazil's 2014 harvest from recent rains may have been overplayed.
The rains have also slowed late harvest, and there are some reports of weak flowering even in Minas Gerais, the top producing state in Brazil, the top arabica-producing country.
Importantly, the real resumed its strengthening against the dollar, getting back below R$2.20 to $1, so boosting in dollar terms the value of Brazilian assets.
Hedge funds have bet heavily on falling arabica prices, which are already near a four-year low, with the net short position above 25,000 contracts.
Chinese import talk
In wheat, speculators' net short position in Chicago futures and options topped 50,000 contracts as of last Tuesday, one of the most bearish positions on record, regulatory data late showed.
And hedge funds paused to think whether they risk being wrong-footed on that position too, given that wheat does boast some bullish credentials.
CHS Hedging, for instance, flagged that "rumours of China increasing wheat imports has wheat and corn pushing higher".
In fact, China's CNGOIC crop bureau lifted by 1m tonnes, to a 10-year high of 7.5m tonnes, its forecast for Chinese wheat imports this year.
China's imports in August totalled 417,000 tonnes, of which 390,000 tonnes were of US origin, customs data showed.
'Potential quality deterioration'
Then there is the wet weather which is upsetting the last of the Canadian harvest, and threatening some of that crop with the quality downgrades seen in the likes of Russia, where further rains are expected this week, a threat to the late harvest and to sowings of winter crop.
"The tail end of the North American spring wheat harvest is being interrupted by wet conditions in western Canada," Benson Quinn Commodities said, noting that "some potential quality deterioration is expected".
OK, rains in Australia are more helpful, coming during the growing season, but are not proving universal.
"Dryness remains across western South Australia, northern New South Wales and Queensland," MDA said.
"With dry weather expected in those areas this week, dryness should persist, stressing wheat."
'Maintain dryness concerns'
Meanwhile, a lack of rain in Argentine wheat-growing areas remains a worry for growers, with MDA saying that "weather over the next several days will maintain dryness concerns in Cordoba, La Pampa, southern Santa Fe, and north western Buenos Aires.
The weather service added that "rains this weekend and next week may improve conditions some, however".
And this at a time when, on the demand side, weekly US export data, as measured by cargo inspections, maintained ideas of a strong pace, coming in at 42.3m bushels, twice as much as in the same week last year, and a figure termed "impressive" by CHS Hedging.
Wheat for December closed 1.1% higher at $6.53 ½ a bushel in Chicago.
Fellow grain corn managed some gains.
But not enough to prevent its discount to wheat topping $2 a bushel, with Chicago's December contract adding 0.5% to $4.53 ¼ a bushel.
OK, the grain had help from more comments of support from Morgan Stanley.
The investment bank said that the weaker dollar, and stronger emerging market currencies, encouraged by last week's decision by the Federal Reserve to delay the withdrawal of emerging stimulus might reduce South American sowings and lift US exports.
(In fact, the dollar edged 0.7% higher on the day against a basket of currencies.)
'Negative for feed demand'
But its US weekly exports were not so hot, at 17.9m bushels, down from 20.2m bushels the week before, tempering enthusiasm at the sale of 197,200 tonnes of US corn to Mexico, as announced by the US Department of Agriculture through its daily alerts system.
Also on the demand side, cattle on feed data late on Friday showed placements on US feedlots last month down 11% year on year, a bigger drop than investors had expected, and in fact the lowest August placement number in 17 years.
"The report is being viewed as bullish cattle and negative feed demand," one broker said.
(In fact live cattle for October closed up 0.65 cents a pound at 126.60 cents a pound in Chicago, with the December lot adding 0.75 cents to 130.50 cents a pound.)
Furthermore, as a negative for corn weather should allow farmers to pick up harvest pace and boost supplies, so weighing on values.
"After the system moved through the Midwest and South over the weekend, the weather models continue to point to a generally wide open period that will allow for substantial harvest progress this week," Darrell Holaday at Country Futures said.
Harvest ramping up
Whether corn stays at a $2-a-bushel discount to wheat, well, that level did not last took long when it was broken over the summer.
Still, it looks set to win investor focus from the soybean: corn ratio, which has continued to correct lower as soybeans too have come under harvest pressure.
Reports from the early soybean harvest have been better than expected, although "the trade has to respect the idea that some of the worst soybean production is yet to come", Benson Quinn Commodities said.
US Commodities said that "yields on soybeans are variable thus far with yields in the 30-60 bushels per acre range".
'Danger for the bulls'
Furthermore, looking at soybean technicals, Iowa-based US Commodities noted that "the soybean market did not respond to bullish news in the last week.
"This is a danger for the bulls."
Hedge funds are also, unlike in grains, net long in soybeans. Indeed ideas of closing long soybean, short grain bets have been seen as offering support to corn and wheat futures.
While US soybean weekly exports did show a sharp pick-up, to 16.8m bushels from 2.97m bushels a week before, soybeans for November closed down 0.6% at $13.07 ¾ a bushel in Chicago.
'Not just vulnerable to quality issues'
Back among soft commodities, cotton for December fell 0.3% to 84.27 cents a pound in New York despite widespread rains over the weekend in the south east raising concerns over crop condition.
"With 36% of the US cotton's bolls opening, compared with 57% average, the US cotton crop is not just vulnerable to quality issues, should rains strengthen from here, but also to delays," Macquarie said.
"In anticipation of this, cotton net speculative length could resume their upward trend."
In fact, in the week to Tuesday, hedge funds raised their net long position in New York cotton futures and options by 2,224 lots to 42,772 contracts, historically elevated but 40,000 lots from the record high reached last month.
Raw sugar for October added 0.4% to 17.25 cents a pound, helped by concerns of rains in Brazil;s Centre South slowing harvesting.