What has been a week-long descent by agricultural commodity prices heading into Friday's main event, the US Department of Agriculture's Wasde report, encountered some upward flowing turbulence in its late approach.

Chinese data are becoming an ever-increasing focus for markets, with the country's rise as an economic power.

And given that this rise has been fuelled by trade, export and import data are especially high profile.

Anyway, the latest batch of statistics, were deemed as most encouraging, in showing exports soaring 25% last month, the fastest pace of growth in nearly two years, and imports by 29%. (They had grown by 6% in December.)

OK, there was some caution, with the timing of China's lunar new year in 2013 occurring in February (next week) and last year in the last week of January.

But it was less easy to discredit another positive datapoint, in inflation slowing to 2% from 2.5% in December, appearing to show the country has scope for opening up the spigots on economic stimulus, should it desire.

Firm start

The data settled broader markets, which have suffered some turbulence of late, unsettled in part by unusual currency moves, with the yen down 5% against the dollar over the past month, and the euro showing a sharp decline on Thursday.

Shares got off to a firm start in Europe, adding 0.5% in London.

The dollar eased 0.3%, helpfully for dollar-denominated assets including many commodities, in making them cheaper for buyers in other currencies.

'Expect some short-covering'

And upward was the default move in agricultural commodities in early deals - although there were exceptions, notably corn.

New York cotton for March added 0.2% to 81.54 cents a pound as of 09:20 UK time (04:20 New York time, 03:20 Chicago time), getting over some disappointment in the last session at relatively weak US weekly export sales, of 113,000 running bales.

New York raw sugar managed some rebound from its close of the last session, which was within a squeak (0.2% in fact) of its lowest since August 2010.

The March contract gained 0.2% to 18.20 cents a pound, although the danger may not be over yet.

"An end to the two-year weakness in soft commodities seems nowhere in sight," said Joyce Liu at Singapore-based Phillip Futures, flagging also weakness in New York arabica coffee, which is also amongst its lowest levels in two years.

"If arabica coffee completely clears down through 140 cents-a-pound levels, we will call for further downside to 130 cents a pound," she added.

The good news for investors is that the relative strength index, a key technical indicator, "is at oversold levels, and the arabica-robusta premium is at its smallest since April 2009 so we can expect some short-covering today".

'Money leaving'

It should be noted that this may not help sugar for long, if a structural problem covering all agricultural commodities proves correct.

Thomas Kujawa at Sucden Financial's sugar desk echoed a caution from grain broker RJ O'Brien over the idea of money quitting the sector for climes deemed more promising for returns.

"There seems to be malaise for the commodity fund community as it is reported that the industry had a bad year [in 2012] in terms of results," he said.

"There are people/money leaving the sphere, and apparently a not-so-attractive future for the commodity index investor as apparently there have been redemptions due to a decline in the perception they are a good hedge against other holdings, in perhaps equities or bonds."

Weather update

But on Friday at least, soybeans and wheat also managed to find a little in the way of updraft from the Chinese data.

The January import data for soybeans themselves made for poor headlines, after the rash of cancellations of US orders in December, in falling 18.8% from December, to 4.78m tonnes.

But this figure was still up 3.8% from a year before – although how much of that was down to new year timings, we will get a better indication next month.

The latest on South American weather looked neutral, with models still squabbling over how much rain is on its way to refresh dry crops in Argentina.

"The early morning run of the 0Z GFS model still offers some pretty good rains in days 8-9  over central and northern Argentina, showing 60% coverage  of 0.25-1.50 inches," weather service WxRisk.com said.

"However, the early Friday morning European   only has the significant rains over northern Argentina, Paraguay into south east Brazil.  Most of Central Argentina stays pretty dry."

'What a difference two months make'

Chicago soybeans for March nudged 0.1% higher to $14.88 ½ a bushel, while March wheat added 0.3% to $7.58 a bushel, gaining some support from continued talk of exports to unusual buyers, a sign that supplies from other shippers are running low.

"There is talk of new soft red winter wheat sales into Turkey and the UK, while rumours of Russia's demand for wheat remain a feature in the news wires," said Brian Henry at Benson Quinn Commodities.

"The business into Turkey and the UK work, but I have serious doubts about ideas that Russia is going to buy soft red winter wheat from the US."

US Wheat Associates, which promotes US wheat, said: "What a difference two months make. As of December 1, US export sales of soft red winter wheat lagged behind the 2011-12 pace by 9%.

"But in just 60 days, soft red winter wheat sales have soared and indications are the accelerated pace could continue for at least the next few months," the group said, adding that "the catalyst for the change was prices falling below the competition's for the first time in six months".

Reasons to be fearful

However, corn extended its decline, falling 0.2% to $7.09 ¼ a bushel for March, ahead of what is expected to prove a downbeat Wasde report, raising estimates for US stocks at the close of 2012-13 after a weakening pace of consumption by ethanol plants and a dismal export pace.

Indeed, while the decline of some $0.25 a bushel Chicago March corn futures this week "suggests that a potentially bearish Wasde crop report for corn is fully discounted, we would note that charts are turning over", said Richard Feltes at RJ O'Brien.

Also, "current December corn prices reflect an unusually low 2013 US corn yield", while "new corn longs, evidenced by a 100,000-lot gain in open interest since January 1, are vulnerable to further selling pressure in weeks ahead"

This is especially true "if the market perceives that bullish news is largely discounted and that longs will be on the defensive until adverse 2013 US growing season weather unfolds".

That's enough, please.