It was not the promising day for commodities, with confidence once again fading in China's economy after data showed the country's services sector expanding at its slowest pace in five months.

Furthermore, Beijing tightened rules on mortgages in the latest effort to slow the Chinese housing market.

"It is increasingly clear that Chinese growth will slow from the second quarter onwards, and this will limit potential for recovery in Asia," Crédit Agricole said in words which would appear to bode ill for commodities, in that the country is a huge importer of many of them.

Certainly, shares in China took a tumble, closing down 3.7%, while shedding 1.5% in Hong Kong too.

Cotton eases

Meanwhile, the dollar rose 0.3%, making dollar-denominated exports such as many commodities less appealing to buyers in other currencies.

So it was hardly so surprising that there was a little bit of weaker tone to early deals on Monday, including in some commodities of which China is a large importer.

New York cotton for May eased 0.1% to 85.30 cents a pound as of 09:20 UK time (04:20 New York time, 03:20 Chicago time), with the Chinese news overshadowing a somewhat bullish monthly report from the International Cotton Advisory Committee.

The committee reduced its global cotton production forecast for 2012-13 by nearly 3% to 22.6m tonnes, while trimming its estimate for year-end inventories by 0.8% to 15.8m tonnes.

'Demand returning to Brazil'

Soybeans, of which China is the top importer, eased a little too, by 0.3% to $14.39 a bushel in Chicago for May delivery.

Bulls gained some solace in a downgrade of 2.4m tonnes by Safras e Mercado to its estimate for the Brazilian soybean crop, citing excessive rain in Mato Grosso last month, and taking the crop figure to 82.24m tonnes.

While still a record, the downgrade took some of the shine off a 500,000-tonne upgrade to 84.5m tonnes in Informa's estimate for the crop, while AgRural lifted its forecast by 900,000 tonnes to 82.1m tonnes.

"Brazil is on track to produce a bumper soybean crop and global export demand is returning to Brazil again as exports in February jumped," Joyce Liu at Phillip Futures said.

"At current high price levels, further weakness in soybean contracts can be expected [in Chicago]."

Saudi order

Wheat was down too, by 0.7% to $7.15 ¾ a bushel for Chicago's May contract, on track for its first negative close in five sessions, after a bounce from eight-month lows reached early last week.

OK, Luke Mathews at Commonwealth Bank of Australia noted that "the market continues to talk about the improvement in demand for US supplies given the February price slide". 

Saudi Arabia announced a large wheat purchase over the weekend, of 465,000 tonnes of hard wheat and 110,000 tonnes of soft, although origin was not specified.

Prices for the two soft wheat cargoes were $326.28 and $330 a tonne, with the hard wheat loads priced from $317.13 to $361.63 a tonne.

'Considerable snow melt'

However, on the negative side, the hopes for US exports come against a backdrop of ideas that Ukraine could return to shipments, with potentially 2m tonnes to sell.

And the weekend brought more precipitation for dry US Plains areas where seedlings have been struggling with drought.

"Weekend precipitation was near expectations," MDA said, adding that "considerable snow melt is helping to improve soil moisture".

And looking ahead in the six-to-10-day timescale, the US-based weather service said that "an upturn in precipitation in the central Plains will further improve moisture for wheat.

"The same is true for the Midwest wheat belt."

'Slow farm selling'

It was left to corn to hold up bulls' hopes in Chicago, adding 0.3% to $7.10 ¼ a bushel for May delivery, helped by ideas of firm demand for limited US supplies

"Slow farm selling and improving demand from ethanol plants and end-users are causing the strong cash market and we are seeing some commercial traders trying their luck for potential delivery in the futures markets," Ms Liu said.

"But so far no delivery against the [expiring] March contract was reported by the Chicago Board of Trade."

At Benson Quinn Commodities, Ben Bradbury said: "Domestic basis levels remain firm along with spreads as movement on the producer level continues to be slow.

"I would anticipate further appreciation in board prices will attract better sales, but for now things are quiet."

Rins up

Mr Bradbury noted in particular a rise in prices of ethanol Rins – paper credits assigned by producers to ethanol batches, that users can be used by blenders as a substitute for the real biofuel.

Prices of Rins have risen above $0.60 a gallon – well above their traditional price of some $0.02 a gallon, and improving the benefits to producers of making ethanol, and taking the covers off plants mothballed last year when corn prices hit record highs, severely squeezing margins.

And Brazil's government has confirmed that its own mandated level of ethanol in gasoline will revert to 25%, from 20%, in May.

Meanwhile, the extent of the sell-off in corn by speculators may have some investors thinking twice about putting on fresh short positions.

Speculators' net long position in Chicago corn futures and options fell more than 13,000 lots in the latest week to an eight-month low of 52,000 contracts.

Sugar sweetens

In New York, raw sugar also made early gains, underpinned by data showing that India's sugar mills produced 18.8m tonnes of the sweetener in the first half of 2012-13, ie from October to February, down 60,000 tonnes year on year.

Output in Uttar Pradesh, India's second-ranked producing state, fell by 300,000 tonnes to 5.0m, the Indian Sugar Mills Association said in a statement, blamed cold weather.

Raw sugar for May, now the spot contract, added 0.4% to 17.98 cents a pound.

In Kuala Lumpur, palm oil gained too, adding 1.4% to 2,403 ringgit a tonne for May delivery, looking for its first gain in nine sessions.

The recovery reflected in part soyoil's firm performance in Chicago on Friday, but also the prospect of a major palm oil conference in Malaysia, which will include price outlooks, encouraging some investors to err on the side of caution and take profits on short positions.