Grains and oilseeds made another downbeat start, still in the downdraft of harvest pressure, enhanced by nerves over US statistics out later.

The US Department of Agriculture will later release its quarterly report on crop inventories, this time as of September 1, a briefing which has a history of surprises, most lately negative ones, centring on corn.

Indeed, the prospect of the data has been a major reason behind declines in corn, soybean and wheat futures so far this week, along with it being the month and quarter end.

Period ends often herald tidying up by funds of futures positions, a process which, with large net long holdings in corn and soybeans in particular, is seen likely to exert downward pressure.

Firm export sales

The selling at least held off in soybeans early deals at least, countered some of the oilseed's brighter fundamental factors.

Indeed, it was little surprise that soybeans were firmest in early deals, adding 0.1% to $15.71 ¾ a bushel for November delivery as of 09:15 UK time (03:15 Chicago time), given the healthy US exports of the oilseed of late.

On Thursday, the USDA unveiled 110,000 tonnes of sales to China on the day, on top of healthy sales last week of nearly 800,000 tonnes.

"Total sales over the past four weeks are running 187% higher year on year," Luke Mathews at Commonwealth Bank of Australia said.

'Strong global meal demand'

"US soymeal export sales were particularly strong last week, supporting our thesis that strong global meal demand remains a major factor supporting prices," Mr Mathews added.

Soymeal itself was 0.1% higher at $474.30 a short ton.

And elsewhere in the oilseeds sector, even palm oil felt the better mood abroad for now, on a touch of bargain hunting, after Kuala Lumpur prices in the last session fell to 2,569 ringgit a tonne, the lowest in two years, also on concerns over inventories.

"Traders said palm oil inventory in second-ranked producer Malaysia could climb higher in September after reaching a 10-month high in August, as exports did not rise enough to offset high production," Ker Chung Yang at Phillip Futures said.

The lot on Friday reached 2,613 ringgit a tonne, a gain of 0.2% on the day.

'Dismal exports'

Chicago corn did not get such a bright start, amid some residual nerves over the data later, which are expected to show a US corn inventory figure of 1.11bn bushels for the beginning of the month, and the end of 2011-12.

The number is also particularly important for the grain in reflecting domestic demand at a time when foreign buyers appear to have little interest in it.

Weekly export sales were all of 368 tonnes, a figure termed "dismal" by Mr Mathews and others, and underlining the lack of competitiveness to importers of US supplies against Brazilian crop swollen by a bumper safrinha harvest.

'Watch the charts'

Furthermore, technically the grain looks less attractive, having shot down through a range of technical landmarks, and testing now $7.15 a bushel, which marks the 38% retracement from the last high, a key pointer for followers of Fibonacci analysis.

"Now what? Watch the charts," Mike Mawdsley at Market 1 said.

"A close below $7.00 a bushel would have everyone targeting the July 5 gap of $6.76-6.86 ¼ a bushel for the next downside objective."

That said, "a bearish number" from the stocks report "and higher close would be a sign that the sell-off may be over", he added, noting that "last year both corn and soybeans made their lows in the first week of October".

Corn for December fell 0.4% to $7.13 ½ a bushel.

'Fundamentals remain very supportive'

As for wheat, it stood down 0.2% at $8.54 ¼ a bushel for December delivery, feeling the influence of both corn and soybeans, as it has done in recent sessions.

In fact, "wheat market fundamentals remain very supportive for global wheat prices with Russian export offers drying up and the Australian crop under pressure due to adverse weather condition", according to Richard Williams at AWB, Cargill's Australian grain handling business.

"However, the weight of falling US corn and soybean futures markets is placing some pressure on global wheat prices in the short term."

And for both row crops, as the US harvest continues "yield expectations are being revised higher across the market combined with significant selling of Chicago futures by large fund managers who held long positions".

'Technical damage'

Still, there are some negatives around for wheat, which also faces a US production report today for the recently completed harvest, although little is expected in the way of surprises.

"Wheat continues to do technical damage to the charts, which has the potential to trigger additional fund selling," Brian Henry at Benson Quinn Commodities said.

"The prospects of increased wheat exports have not provided enough support to hold the recent range.

"The trade that has not been concerned about being priced out of the soft wheat export market may be staring to pay attention to the fact that South American corn is trading at a steep discount to US soft wheat."

China holiday

Soft commodities meanwhile, lacking the concern of key data later, moved more in line with external markets, which were largely positive, with an improved feel over Spain following the release of budget details, and hopes of Beijing action to support the Chinese economy.

The safe haven of the dollar eased 0.1% while Shanghai stocks added 1.5% to put a little more distance between themselves and their three year low hit earlier in the week.

They will be unable to do any more next week thanks to a Chinese holiday, which is worrying some sectors, given the dearth of activity it will likely bring from a major buyer of assets including many commodities.

Still, with Chinese crop futures entering holiday mode positive too, with cotton up 0.4% at 19,405 yuan a tonne for January, the fibre, of which China is the top importer, was helped to a 0.3% gain to 71.75 cents a pound in New York too, for December delivery.

New York raw sugar was helped 0.4% higher to 19.67 cents a pound for October delivery by a forecast by the Office of the Cane and Sugar Board in second-ranked exporter Thailand that shipment in 2012-13 would ease to 7.7m tonnes following a dearth of rain.