Wasde day, as so often happens, brought calm to early deals in agricultural commodities.

Many markets managed solid gains, underpinned by Chinese data which, on the face of it, looked strong, with a 22% rise in exports, year on year, allowing the country to build a trade surplus of $15.3bn for February.

That also reflected a 15.2% tumble in imports which economists said was a reflection of the falling of lunar new year celebrations in February this year.

Still, Tokyo shares rose 2.6%, also building on hopes of a further depreciation in the yen, while Hong Kong's Hang Seng index gained 1.4%, although Shanghai stocks posted a 0.2% drop.

Data later

However, for investors in many agricultural commodities, all eyes were on the release of the Wasde at 11:00 Chicago time, 17:00 UK time, in which the US Department of Agriculture will update estimates for world crop supply and demand.

The prospect of the Wasde - which is expected to upgrade forecasts for US corn and wheat stocks at the close of 2012-13, but downgrade expectations for soybean inventories - has been blamed in part for recent price moves.

Wheat prices have set a series of eight-month lows, and are set in Chicago for a seventh successive week of decline, while the best-traded May corn contract has approached an eight-month low too.

Meanwhile, soybeans, for which the Wasde is also expected to cut hopes for South American production, have proved relatively robust, even, on a spot contract basis, closing above $15.00 a bushel in the last session for the first time in four months.

Buy the rumour, sell the fact…

How the Wasde actually plays out, well, that's a different matter.

"Last month saw trade rallying soybeans ahead of report only to wipe out most of gains on 'buy the rumour, sell the fact' trading," said Kim Rugel at Benson Quinn Commodities.

"I would anticipate similar reaction on Friday."

At RJ O 'Brien, Richard Feltes said: "I am not sure how the crop report can be bullish as trade has already discounted cuts in the South American soy crop and 2012-13 soybean stocks."

Conab, Brazil's crop bureau, which is seen has having a large impact on USDA estimates for Brazil, even put an extra flag in the ground on Thursday by cutting its own forecast for the domestic soybean crop.

'Strong gains not justified'

Furthermore, as an extra reason for Friday's Chinese trade data saw a 24% slump year on year in February imports of the oilseed, to 2.9m tonnes, and down from 4.78m tonnes in January.

However, at Phillip Futures, Joyce Liu took a more positive stance, for old crop soybeans at least, saying that "we expect nearby soybean contracts continue to gain against deferred contracts", given the prospect of Wasde inventory downgrades.

But with the report to come, no contracts were particularly motivated in early deals in Chicago, with the May lot gaining 0.2% to $14.77 a bushel, and the March contract 0.2% to $15.06 ½ a bushel as of 09:20 UK time (03:20 Chicago time).

The new crop November lot edged 0.1% higher to $12.79 ¼ a bushel.

'Not justified fundamentally'

Ms Liu saved her bearishness for wheat, saying that a strong bounce in the last session was spurred only by bargain buying and profit-taking on the many short positions in the grain, looking very profitable as prices have dived to their lowest since June in Chicago.

(In Paris, May wheat futures have fallen to their lowest since July, and in London to their weakest since August.)

The last session's "strong gains are not justified fundamentally, hence we expect wheat to experience some pullback today", Ms Liu said.

After technical analysis, "we expect Chicago wheat to test $6.75-a-bushel levels, its 76.4% retracement of the price rally due to Midwest drought in July last year".

"If the price manages to clear through that level, it is likely to fall further to $5.80-a-bushel levels."

Demand-based turnaround?

Not that all observers are quite so downbeat on the grain, after healthy US weekly export sales data of 828,000 tonnes, combined old crop and new, a result beaten only twice in the last two years.

"For some time now the trade has been expecting official US wheat export to reflect the relative cheapness of US supplies, and last night's weekly sales result provided confirmation that demand for US wheat has indeed improved," Luke Mathews at Commonwealth Bank of Australia said.

"Cumulative sales over the past month are now up 24% year on year."

Illinois-based broker EHedger said: "We are finally getting that strong export demand from having ultra-competitive wheat prices.

"Combine that with the potential for heavy domestic wheat feeding and wheat could have a demand-based turnaround or at least slow the liquidation."

Still, wheat was hardly motivated to get too far out of bed either, gaining 0.2% to $6.88 a bushel in Chicago for March delivery, but losing 0.2% to $6.94 a bushel for the better-traded May contract.

'Planting more soybeans'

The grain which actually moved furthest, and upwards, was corn, despite Thursday's dismal US export sales data, including a net cancellation of 50,000 tonnes for 2012-13.

And, "with growing talks of ethanol producers turning to alternative wheat and sorghum, we can expect some weakness in corn demand and corn prices", Ms Liu said.

Still, what is counting in the grain's favour are the increasing thoughts, as highlighted by Agrimoney.com on Thursday, that US producers will prioritise soybeans rather than corn in sowing plans, given recent price patterns.

"With the break in corn prices, the corn-soybean ratio is starting to favour planting more soybeans in some areas," EHedger said. 

'May be in for a new bullish trend'

Among soft commodities, sugar is attracting growing attention after its 3% rally of the last session, and growing ideas that lows below 18 cents a pound late last month may have marked at least a temporary low.

A big issue is the imminence of the next Brazilian cane crushing season, next month, at which ideas that the country's mills may prefer to turn the crop into ethanol rather than sugar - given current pricing relationships, and changes in tax and blending rates - will be put to the test.

Ms Liu said that "a combination of rising diesel prices and highly-anticipated ethanol tax exemption has fuelled expectations of [a change in the] sugar-ethanol production split, making sugar slightly more scarce and more desirable, although global supply is still in abundance".

She added that if New York raw sugar futures "manage to push through 19 cents per pound, we may be in for a new bullish trend".

'Temporary' rebound?

CBA's Luke Mathews said further appreciation in New York's May sugar contract toward its 100-day moving average, just short of 19 cents a pound, "appears likely in the near term".

"However, we remain wary that all previous short-covering bounces over the previous six months have proved temporary," he added.

The contract added 0.4% to 18.84 cents a pound.