Could soybeans build on their 3% gains of the last session?

The answer was yes, in early deals on Wednesday at least, boosted by what Richard Feltes at RJ O'Brien termed a "perfect storm of bullish developments".

These showed further squeezes on both the supply and demand sides of the market, justifying higher prices - although there is cause to think that headway might run into turbulence if it goes too much higher.

Queuing ships

OK, Oil World's downgrade of 2m tonnes in its estimate to 50m tonnes in its estimate for Argentina's soybean crop was not too much of a game changer, in already being reflected by some other commentators, and offset a touch by a 500,000-tonne upgrade to its estimate for Brazil too.

But the process of actually getting the soybeans from South America, and in particular Brazil which has already harvested a notable portion of its crop, is attracting increasing concern.

"Rains have delayed harvest and are now delaying loading of vessels in Brazil," Benson Quinn Commodities said.

"Vessels line-ups are estimated out 30-40 days, with talk that upwards of 11m tonnes of capacity is waiting to load beans," with some soymeal and corn volumes included in that estimate too.

'Pipelines run dry'

And this when demand remains firm.

China - which returned from holiday with a two-cargo purchase of US soybeans, when the thinking was that it would turn to South America for its needs – does not represent the only buyer in town.

Benson Quinn flagged higher cash basis bids from exporters wanting to meet other country's needs too "as pipelines run dry in US".

Weekly US export inspections, at 40.4m bushels, revealed on Monday, were up nearly 10m bushels week on week, and beat market expectations.

Meanwhile, in the US itself, the pace of crushing remains "robust", Mr Feltes said.

'Torrid usage'

"The take home point is that torrid September-to-February US soybean usage pace of approximately 2.263bn bushels must slow to 823m bushels during March to August," Mr Feltes said.

OK, usage usually does decline, as importers take their trade to South America as harvest refills silos there.

But the decline of 63% in usage during March to August this year (and the second half of the 2012-13 marketing year) implied by these calculations is well below the 37% decline in the second half of 2011-12.

Chart factors

Furthermore, there are technical reasons to be bullish on soybeans too, with the March contract now passed back above its 10-, 20-, 50 and 100-day moving averages.

And Friday sees the expiry of March options which have plenty of coverage around $14.80-15.00 a bushel, potentially acting as a draw for futures.

However, whether the contract can go too much higher… Mr Feltes flagged that the $15-a-bushel area "has proven to be strong resistance in both December and January" to upward movement.

The contract stood 0.7% higher at $14.81 ¼ a bushel at 09:00 UK time (03:00 Chicago time).

Long-awaited event

Another uncertainty for soybeans and all major crops grown in the US is the prospect of the US Department of Agriculture's annual Outlook forum starting on Thursday, at which it gives its first proper glimpse at its estimates for 2013-14 balance sheets.

While expectations are that soybean acreage will not see a huge increase in the USDA numbers, corn may well see a further increase from last year's levels which were the highest since the 1930s.

(Fertilizer group CF Industries overnight pegged US corn area at 97m acres, flat year on year.)

With talk too of an initial USDA yield estimate above 160 bushels per acre, compared with the 123 bushels per acre achieved last year, there is obviously potential for a huge rise in production.

Big stocks?

Indeed, trade talk is of a 2bn-bushel US corn carryout at the close of 2013-14, three times the tight levels of the current season.

And this when one of the most bearish commentators on Argentina's crop, Michael Cordonnier, has raised his estimate for that harvest, by 1.5m tonnes to 24m tonnes, citing better rains in the north of the country.

Meanwhile, US exports, as measured by cargo inspections, were poor in the latest week, at 9.5m bushels, down from 14.8m bushels a week before.

And there is significant rain and snowfall forecast across much of the Plains and the Midwest, easing drought fears, for winter wheat as well as spring crops.

Ethanol uptick

Still, there is some hope for corn bulls, with higher US crude prices supporting a trend of reopening US ethanol plants, mothballed last year as prices of the grain peaked.

"The implication for ethanol is that positive plant margins are likely to continue near term, which may need a ramp down in US corn used for ethanol," Mr Feltes said.

Furthermore, technically, "there is significant open interest at the $7.00 –a-bushel strike in the March options that are expiring this Friday, which is suggestive that the market should show a tendency to gravitate towards that level", Benson Quinn Commodities said.

Chicago's March contract stood unchanged at $6.95 ¼ a bushel.

Egypt buying

And wheat did even better, boosted by the potential for a US win in the latest tender by Gasc, the state grain authority in Egypt, the top wheat importer.

Gasc after the close of markets on Tuesday unveiled a tender for April 10-20 shipment, and should US grain win, it would go a way to changing an observation  that, in Benson Quinn's words "rumours of US wheat exports abound, but confirmation is lacking".

In fact, US wheat was a little out of the running in the latest Iraqi tender, at $399 a tonne, a touch above the $390-395 a tonne at which Australian grain was offered, but geography is seen as tilting the odds when it comes to supplying Egypt.

'Intense drought conditions'

As an extra support to prices, there are ideas that while recent US rains are welcome, more may be needed.

US data "continues to show intense drought conditions over much of the hard red winter wheat growing area", Mark Welch at Texas A&M University said.

"Rainfall over the last 30 days has missed most of this hardest-hit area."

Chicago wheat for March stood 0.2% higher at $7.34 a bushel.

'Tighter-than-expected supplies'

Among soft commodities, the revival in New York raw sugar futures from a two-year low stalled, after two days, despite continued ideas that lower prices are attracting demand.

"The inverse at the front end of the curve possibly indicates tighter-than-expected near‑term supplies and robust demand," Luke Mathews at Commonwealth Bank of Australia said.

He also flagged University of Sao Paulo calculations that the low level of international prices means sugar producers in Brazil, the top exporting country, are better selling in the domestic market rather than for export.

Raw sugar for March eased 0.4% to 18.15 cents a pound.