Grain futures started the day ahead of soybeans.

But Monday sure didn't end that way.

If early deals belonged to concerns about the Chinese economy - which hung around long enough in share markets to see stocks close lower in European markets, after a 3.7% tumble in Shanghai – late deals in Chicago reflected a whole different series of dynamics.

The most notable of these was the hope for more of the rain and snow fall which has already appeared to be US helping winter wheat seedlings recover from a dismal, drought-hit start to their growing season.

From deficit to surplus?

"Snow is expected to build across the north western, central, and eastern Midwest over the next few days, which will further improve soil moisture there," weather service MDA said.

"This will benefit winter wheat this spring, and will also benefit early corn and soybean germination once planting begins."

At Martell Crop Projections, Gail Martell said: "The weather pattern has suddenly reversed course late in winter generating frequent storms and heavy precipitation in the central US.

She noted forecasts for "two new storms this week, the first one targeting the Upper Midwest and Great Lakes and the second, the central Great Plains", where US winter wheat seedlings have been in particularly poor health.  

But for how long?

Ms Martell said: "Drought is rapidly resolving in the US bread-basket. The next storm, if it develops as expected, may even generate a moisture surplus."

Tender defeat?

Furthermore, there was disappointment that the US did not appear to have featured, heavily at least, on the roster of the winning 575,000 tonnes of wheat import orders placed by Saudi Arabia at the weekend, following tender.

"It didn't look like there was any US stuff in there," Jerry Gidel, chief feed grain analyst at Chicago broker Rice Dairy, said.

There was some slightly supportive news on the wheat export front, with US shipments, as measured by cargo inspections, reaching 24.0m bushels last week, up 2.8m bushels week on week, and 6.6m bushels year on year.

And Lebanon was the latest to enter a wheat tender, for 50,000 tonnes, keeping up the idea of healthy import demand in the market as a whole.

'Give growers hope'

However, the prospect of US rain proved decisive.

"The forecast will give growers hope wetter soil conditions will benefit the winter wheat crop that is about to spring from dormancy," traders at a major European commodities house said.

"The above has fuelled more non-commercial selling as traders bet against the wheat price recovering from an eight-month low posted last week.

"Currently the funds have a large short position in Chicago wheat, in other words they are betting that the prices will continue to drop."

Prices drop

While some speculators in fact closed short positions in the week to February 26, regulatory data showed, this may only have created a vacuum for others to fill.

Chicago wheat for May closed down 2.5% at $7.02 ½ a bushel, an eight-month closing low, with the March contract ending down 2.4% at $6.96 a bushel, ditto.

The US performance dragged European contracts lower too, with Paris wheat for March ending down 1.1% at E247.25 a tonne (but not at an eight-month low) and the better-traded May lot down 2.1% at E234.75 a tonne.

London wheat for May ended 1.3% down at £204.25 a tonne.

Export support

Wheat's sell-off dragged on fellow grain corn too, which had posted gains earlier on, after the US Department of Agriculture unveiled the sale of 120,000 tonnes of US old crop to "unknown" destination, believed likely to be China.

"The market then sold off sharply as a $0.20-a-bushel lower wheat market is not conducive to strength in the corn market," Darrell Holaday at Country Futures said.

The US export inspection news was OK for corn too, at 15.7m bushes, up 4m bushels week on week, if half year-ago levels.

And, signally, farmers remain reluctant sellers, supporting cash prices.

"When talking to farmers at recent meetings it would appear it will take near $8.00-a-bushel cash to have them open the bin doors again," Paul Georgy at broker Allendale said.

Spreads widen

Furthermore, "the natural seller, the producer, will be mostly out of the market in March, April, May," when spring sowings will be attracting farmers' attention, US Commodities said.

"The market will be forced to rely on hedge inventory from the commercial."

While corn fell, its decline was signally less than that of wheat, with Chicago's March contract closing down 0.2% at $7.23 a bushel – a premium of more than $0.20 a bushel to its wheat peer.

The March corn lot gained on May corn too, which ended down 0.7% at $7.03 ¼ a bushel.

That said, that still left Chicago's May corn contract as well at a premium to its wheat peer.

US to import soybeans?

However, for bona fide gains, it was necessary to turn to soybeans, which closed up 1.7% at $14.90 ¼ a bushel for March delivery, and 1.4% at $14.62 a bushel for the better-traded May lot.

"Export business is still providing the strength in the soybean complex," Country Futures' Darrell Holaday said.

In fact, the US announced cargo inspections of a bumper 40.3m bushels of soybeans last week, up 12.5m bushels week on week - and higher indeed than a year before, when the US had more to spare.

"We are shipping that many soybeans out, it looks like come May we will have to turn to South America to buy some back again," Rice Dairy's Jerry Gidel said.

"The prospect of importing has been heightened dramatically."

History repeating?

Soft commodities enjoyed a mixed day too, with cocoa falling to a 10-month low in London, where the May contract ended down 1.3% at £1,388 a tonne, and an eight-month low in New York, where May supplies closed 1.2% down at $2,056 a tonne.

"Widespread rains have arrived in West Africa, providing welcome relief to cocoa producers who were getting concerned that the Harmattan season was leading to too dry conditions for the developing mid crops," Macquarie said.

"This is likely adding to the bearish near-term sentiment."

Commerzbank said that, while the International Cocoa Organization last week forecast a world cocoa deficit of 45,000 tonnes in 2012-13, "memories of the previous year are likely to be awakened.

"At the time, the first estimate for 2011-12 assumed a market deficit of 71,000 tonnes, only for an 86,000-tonne surplus to be achieved at the end of the day."

Bouncing beans

However, New York arabica coffee futures for May soared 2.3% to 146.65 cents a pound.

The gain was attributed to jitters over speculators' high level of short positions in the bean, at a time when there are nerves over losses in Central America to roya fungus, which could hit the headlines again this week given the ongoing meeting of the International Coffee Organization.

New York cotton for May added 1.0% to 86.26 cents a pound, helped by the International Cotton Advisory Committee standing by a forecast of a decline in world stocks in 2013-14, contrasting with USDA ideas of a further increase.