Did the weak tone of soft commodities, bar cotton, in the last session set the tone for grains and oilseeds on Wednesday?

Many investors were braced for something of a pullback in Chicago this time.

"We feel yesterday's rally was an overreaction," said Joyce Liu at Phillip Futures, with reference to the near-2% rise in soybean futures, and concerned over whether rumours of fresh demand from China will prove fulfilled.

"As it is too hasty to say if China's import demand will sustain, we expect strength in soybeans to taper off today."

Shares vs ags

Benson Quinn Commodities said that the day "may invite Turnaround Tuesday-style price action" - even though today is Wednesday.

Chicago traders say a strong price direction on the first session of the week – such as soybeans' rise - is often reversed on the second, and this week had a delayed start in the US, after Monday's Martin Luther Day holiday.

Furthermore, higher equity markets "on the back of better earning from Google may also weigh on beans and the commodity complex as funds search for better opportunities and better returns", the broker said.

The idea of funds potentially preferring equities to agricultural commodities, and other asset classes too, in 2013 has become a bit of a talking point.

'Leaking momentum'

Giving extra weight to bearish arguments was a deteriorating technical picture, with March soybeans, and March corn, baulking at their 75-day moving averages in the last session.

In wheat, Benson Quinn said that "momentum studies are still pointing up, but are leaking with an outside lower day" on Tuesday – one in which prices trade outside the range of the previous day, but end lower.

Furthermore, new crop contracts are not giving much support to nearer lots, with ideas of strong US harvests still strong enough to give values a steep backwardation.

"It appears it will take an act of Congress to get December corn over $6.00 a bushel," said Mike Mawdsley at broker Market 1, with the lot so far in 2013 treading water in the $5.90s.

'Boats may soon back up at ports'

Still, it was not as if bears hold all the cards, with the dryness in Argentina and southern Brazil still a concern.

World Weather said that "conditions in Argentina will continue to deteriorate over the coming week as topsoil moisture is depleted and temperatures trend warmer", with Commodity Weather Group forecasting a dry February in the South American country.

And this at a sensitive time, when soybean crops are undergoing pollination and pod-filling.

Furthermore, Benson Quinn flagged the risk to logistics, if not necessarily to yields, of the downpours in central Brazil.

"Wet weather in central Brazil is creating woes for the importers as early harvest is being delayed harvest and boats may soon back up at the ports waiting fresh supplies," the broker said.

"This is seen as bullish development for the market as would keep world importers in the market for US beans when we need to be rationing demand."

'No evidence of reduced feeding'

The result was something of a stalemate, with Chicago prices easing in very early deals, but tending towards the positive by 09:30 UK time (03:30 Chicago time).

"Price action in grains suggests markets are consolidating as they await further developments on South American weather and demand," Richard Feltes at RJ O'Brien said.

Corn price behaviour "suggests declining momentum, a lack of conviction and the need for more information on the degree to which a near$0.50-a-bushel rally in the March contract from early January lows has restrained demand".

After all, while ethanol and export data appear to be confirming rationing, "in the critical feed sector, we don't have any evidence of reduced feeding given slight uptick in poultry numbers and anecdotal reports of stable to higher hog production".

Price rises

Corn for March gained 0.25 cents to $7.28 ¾ a bushel, with wheat for March losing 0.25 cents to $7.79 a bushel.

Soybeans did best, recovering from early losses to stand at $14.56 ¼ a bushel, a gain of 0.3% on the day.

Any believers of the "oats know" adage, that the grain is a leading indicator of the prices of the major grains, might like to note that Chicago's March contract was 1.1% higher at $3.63 a bushel.

'To continue heading south'

As for soft commodities themselves, they proved reluctant to move too far yet, too.

New York raw sugar for March, which closed on Tuesday at the lowest for a spot contract since August 2010, edged a further 0.1% lower to 18.10 cents a pound.

"Expectations of yet another bumper crop in 2013-14 weighs in on the market and we foresee sugar to continue heading south today," Phillip Futures' Ms Liu said.

Cotton's rally, meanwhile, which took it to a seven-month high in the last session, stalled, with New York's March lot easing 0.1% to 78.89 cents a pound.