The ideas that the latest US Wasde crop report was supportive for grain and oilseed prices continued to pour in on Friday.

"In our view the report was bullish for corn prices, supportive for wheat and neutral for oilseeds," if bearish for cotton, Luke Mathews at Commonwealth Bank of Australia said.

"This report reinforces that global feed grain supplies are critically tight and that prices must remain strong to ration demand. Consumers cannot afford any production issues over the coming year."

In Paris, Agritel said: "The report confirmed the tightness of commodities balances."

That was in line with the comment from brokers on Thursday after the Wasde, the benchmark US Department of Agriculture crop report, cut estimates for US (and world) corn stocks wafer thin, and reduced estimate for domestic wheat inventories too.

The estimate for soybean stocks, while raised a touch, remained uncomfortably tight.

Back to selling

But if investor action speaks louder than analysts' words.

And there wasn't a lot of it, in terms of buying activity, on Friday.

All eyes were on corn, after its 5% jump in the last session, near limit-up, was seen a sign of it regaining market leadership in Chicago - and, many bulls hoped - racing away to the levels of $9 a bushel which were commonplace thinking earlier in the summer, as the worst US drought in more than 50 years ravaged the US crop.

However, instead, investors reverted to the pattern of selling down their net long holding which has marked the last couple of months or so.

'Cautious going forward'

Indeed, just as funds appear to have viewed the last jump in prices - two weeks ago, on data showing surprisingly weak US corn inventories at the close of 2012-13 – as an opportunity to take profits, the latest jump seemed to being taken in the same light.

Corn for December dropped 0.8% to $7.67 ¼ a bushel as of 09:20 UK time (03:20 Chicago time), losing on a fraction of its gains in the last session, but losing ground all the same.

The central concern over whether higher prices are justified is whether enough users will pay up.

As Societe Generale said soon after the Wasde was released, while the tightness of corn supplies "certainly seems bullish for prices, we would be cautious going forward, given the demand destruction seen so far".

Data later

More will be known on demand, in terms of exports, later on, when the USDA unveils its weekly export sales data, delayed a day by the Columbus Day holiday on Monday.

Not that a huge figure is expected, given the competition from South America that the USDA has acknowledged on Thursday in cutting its forecast for US corn shipments in 2012-13 to a 38-year low.

South Korea's largest feed group, Nonghyup Feed, did its best to undermine confidence on Friday by cancelling tenders for 210,000 tonnes of corn and 70,000 tonnes of feed wheat, citing high prices.

Wheat falls

Indeed, with corn prices sagging, wheat struggled too, given that many saw it coming off in second place in bullishness from the Wasde, with estimates for world stocks not cut as significantly as many had hoped.

That said, the USDA data included an estimate for the Australian crop which, at 23.0m tonnes, is above that of other observers, and had an 11.5m-tonne estimate for Argentina questioned soon after.

In Argentine itself, the Buenos Aires Grains Exchange pegged the crop at 10.1m tonnes.

Wheat for December fell 1.0% to $8.76¾ a bushel.

'Needs a weather scare'

And with the grains weakened, soybeans dropped too, with the oilseed, in the Wasde, relying on larger demand to mop up a less-bad-than-feared US harvest.

At Benson Quinn Commodities, Kim Rugel noted that "it was the demand numbers and tight US carryout that rallied trade" in the last session.

"Globally, data is not so bullish with world ending stocks increased 4.5m tonnes to 57.6m tonnes. This capped Thursday's gains and will offer resistance as South American planting gets under way.

Overall, the "data keeps beans in sideways range from $15 a bushel to $17 a bushel, with the market needing a weather scare to rally above $16 a bushel".

With Friday not bringing a weather scare yet, Chicago's November soybean contract dropped 1.2% to $15.30 ½ a bushel.

Cotton recovers

An easier tone married with some more negative feeling abroad on commodities market too, with copper easing in London in early deals, amid nerves ahead of Chinese trade data due over teh weekend.

These are much watched by investors in agricultural, as well as industrial, commodities, with China the top buyer of the likes of cotton, rubber and soybeans.

Indeed, if there was a bigger surprise on Friday, it was that cotton staged a rebound despite this concern, and a Wasde report seen universally as bearish for the fibre, in raising ideas of world stocks to a still-higher record high, equivalent to nearly nine months' use.

Maybe ample plus 2.6m bales is still ample…

Cotton for December added 0.7% to 71.18 cents a pound in New York, where raw sugar managed to regain some composure after its hefty fall of the last session, on talk of buyers cancelling cargoes and lower imports.

"Export demand for sugar will likely see a large drop in 2012-13 with Chinese imports expected to be halved amidst rising domestic output, high inventory and slowing economy," Lynette Tan at Phillip Futures said.

The March contract recovered 0.2% to 20.50 cents a pound.