Corn futures have in Chicago closed below their 200-day moving average only once in the last seven months.

But they were investigating a second in early deals on Monday, falling within 0.5 cents of the line, and maintaining the weakness evident on Friday when the US Department of Agriculture, in its benchmark Wasde crop report, raised estimates for domestic and world inventories of the grain.

Indeed, technical factors, and bearish reaction to Friday's Wasde, were only two reasons for bulls to tread warily in corn, and other ags too.

Another was a wetter tone to the weather forecast for Argentina, where corn and soybean crops need the rain, and the drier outlook to central Brazil, where farmers need a break from precipitation to get harvest moving.

That said, as ever, interpretation is everything.

South America weather

Weather service MDA said that while the forecast for the Argentine corn and soybean belt was "unchanged this week", the outlook for the six-to-10 day period was "wetter and cooler overall".

(Rain over the weekend was "near expectations", the service added.)

If that was one tick to the bears, Brazil, where rain has been interrupting the soybean harvest, provided another.

"The six-to-10 day outlook is drier in central crop areas versus Friday's outlook", besides being cooler in southern areas where, like Argentina, rainfall has been less than ideal, MDA said.

'Enough to spook everybody'

WxRisk.com, for Brazil, flagged that, in central Brazil, "eastern portions of Mato Grosso, all of Goias, Tocatins, Minas Gerais, and  Bahia  are completely clear of any rain over the next five days".

However, it took a more nuanced view of the Argentine six-to-10 day outlook, noting that while the European model was forecasting rains of 1-3 inches over most of central and north eastern parts of Argentina, the GFS model was "not nearly as wet".

"There is a lot of data which shows that the European model is overdoing things here," WxRisk.com said.

"It is not all certain that in the six-to-10 day central eastern Argentina is going to see as much rain as the European model is depicting."

That said, the weather service acknowledged that "the threat of heavy rains over central and northern Argentina from the European model is finally going to be enough to spook everybody" in early futures trading.

'Spreads should remain strong'

It was particularly significant that soybean futures dropped, and quite heavily, given that the oilseed has been resilient in Chicago of late, supported by strong US exports as well as Argentina weather fears.

Furthermore, in the Wasde, the USDA cut its estimate for domestic soybean stocks as of the close of 2012-13 to the lowest in nearly 50 years.

And there are plenty of brokers still willing to talk of strength within the soybean complex, if moreso of spreads between old and new crop lots rather than necessarily the flat price itself.

"We should see bottom-pickers cautiously buying soybeans, although the price action on Friday suggests more opportunity in spreads than flat price," Richard Feltes at RJ O'Brien said.

At Benson Quinn Commodities, Kim Rugel said that "spreads should remain strong as the US producer shuts off selling, and the large task of cutting usage in the second half of the marketing year begins".

'Likely drift lower'

However, as Rabobank said of Friday's Wasde, "higher-than-expected South American production estimates may temper the bullish revision to the US soybean balance sheet".

Futures were "set to continue trading on South American weather", the bank said, adding that "grain and oilseed markets will likely continue to drift lower".

Bulls were hardly helped by lunar new year celebrations in China, and many other parts of Asia, putting a dampener for now on ideas of demand from that region.

Ms Rugel advised investors to "look for lower start to trade" on the Monday session "on follow-through liquidation due to margin calls and lack of fresh demand with China on holiday".

After all, "when China returns after being out of the markets for a full week, all demand should shift to South America, making for a tough task to rally flat price market".

'Had their horns trimmed'

Chicago soybeans for March indeed stood 1.1% lower at $14.36 ¼ a bushel at 09:44 UK time (03:44 Chicago time).

Technically, it is worth noting that now, in two sessions, the contract has fallen from being above all its major moving averages to being below them.

Furthermore, the lot, having failed repeatedly last week to rise through $14.95 ½ a bushel, the 61.8% retracement from September's high (a key level for followers of Fibonacci analysis), on Monday dropped through $14.40 a bushel, the 76.4% retracement.

Bulls have "had their horns trimmed", Mike Mawdsley at Market 1 said, flagging that "if the market can't go up, with will go down".

'Horrible week'

For corn, Mr Mawdsley said that last week was "horrible", especially for the new crop December lot, in which investors should "sell rallies if given a chance".

And they may have some ammunition after, amid rising South America weather fears, speculators raised their net long position in Chicago corn futures and options by 18,500 contracts in the latest week, to the highest since before Christmas, according to US regulatory data released late on Friday.

(For soybeans, the uplift was even more extreme, by more than 30,000 contracts to a net long of 135,644 lots, the biggest in three months.)

Chicago corn for March dropped 0.4% to $7.06 a bushel, with the December lot falling 0.6% to $5.59 a bushel.

'Questionable how much downside remains'

That was hardly helpful for wheat either, which dropped 0.6% to $7.51 ¾ a bushel despite Russia talking of ditching its import duty on the grain this quarter, rather than in April, and some modestly bullish assessment on US export prospects.

"With world wheat supplies tight, prices near long-term lows and funds still short, it is questionable how much downside remains for wheat this winter," Benson Quinn Commodities said.

"At the same time, the US isn't going to run out of wheat anytime soon and the world buyer remains price sensitive. It remains to be seen if a major rally can develop."

Thai downgrade

Bulls had more luck in New York, where cotton - which emerged from Friday's Wasde with diminished bearish credentials, thanks to another cut to the estimates for end-2012-13 stocks in the US – added 0.4% to 82.96 cents a pound for March delivery.

And New York raw sugar for March added 0.6% to 18.25 cents a pound for March delivery.

At Commonwealth Bank of Australia, Luke Mathews highlighted that in Thailand, the second-ranked exporting country, the "Office of Cane and Sugar Board cut 2012-13 sugar output to 9.0m tonnes from its previous estimate of 9.7m tonnes because of dry weather".

Investors should not that how markets, particularly Chicago ones, behave later on may depend on the USDA's next set of much-watched numbers, the so-called "baseline", long-term forecasts for crop supply and demand, released later on.