Can soybeans recover from their drubbing of the last session?
Chicago's March contract lost more than 2% on Tuesday, undermined by talk of improved Argentine weather and, more importantly, of a switch by Chinese buyers from US to South American supplies.
"The question is whether the sell-off on Tuesday makes it impossible to set a new high before the main sell-off starts," said Anne Frick at Jefferies Bache.
February break come early?
Soybean futures are expected – bar a weather disaster - to dip as South American supplies come onstream, in a process called the "February break".
But has it begun in January this year?
Chicago's March soybean futures contract did manage some headway, but not much, in early deals, adding 0.2% to $12.83 ½ a bushel as of 09:45 UK time (03:45 Chicago time).
There was still plenty to prevent all but the brave seeing the market as having set a floor in the last session.
'Panamax cargos switched their origin'
The rumours of Chinese importers heading for Brazil, and potentially cancelling orders from the US, is a big depressant, touching a raw nerve, having already been an underlying concern for weeks.
"The market believes that two to three Panamax cargos switched their origin from the US to Brazil for February 2014 shipment, as world demand shifts south," CHS Hedging said.
Richard Feltes at RJ O'Brien flagged "unconfirmed" rumours "of US February soy cargos switching to Brazil, where the discount to US soybeans is widening", spurred by a gain last week in the spread between old crop and new crop futures contracts in Chicago.
Benson Quinn Commodities highlighted talk that "Brazil could export 2m-3m tonnes of soybeans in February, versus an earlier outlook for 2m tonnes".
Such talk is being spurred by positive talk from the early Brazilian harvest.
Benson Quinn Commodities noted talk of "much-better-than-expected early Brazilian soybean yields".
"Early soybean yields in Mato Grasso do Sul Brazil are impressive," CHS Hedging said.
But there is also an idea that the crop will find it much easier to get onto vessels this year, as shipments of corn take a back seat.
"Trade is taking note that two-thirds less January, February and March Brazil corn exports than last year are opening up more slots for loading soybeans," RJ O'Brien's Mr Feltes said.
And this before, of course, taking note of the rains forecast for Argentina, where dryness and heat has been an issue, besides technical factors.
The March soybean contract in the last session triggered technical alarm bells by falling through a range of moving averages.
By separate analysis, Mike Mawdsley at broker Market 1 noted that the March contract, having touched a downtrend line last week, at $13.39 a bushel, was now approaching an uptrend point near where the 200-day moving average is at about $12.76 a bushel, which should provide resistance to downward movement.
Looking up, "the $12.97-13.00-a-bushel level should be resistance on bounces now that we are below it," Mr Mawdsley said.
'Giant intra-commodity spread'
In the last session, soybeans' collapse was not all bad for prices of grains, and in particular corn, given that it was fuelled by the closure of long soybean-short grains spreads.
"Managed money has held a very large net long soybean position. They are also short corn and wheat at the same time," one broker noted.
"It is no coincidence that corn and wheat held support while soybeans did the opposite, this giant intra-commodity spread continues to keep these markets at a strong inverse correlation."
Still, grains rose too this time, amid ideas that the market may have got ahead of itself in getting too gloomy on prices.
After the surprise Wasde crop report on January 10, after all, there was much talk that the surprise downgrade by the US Department of Agriculture to its forecast for domestic corn stocks at the close of 2013-14 had secured futures a price comfortably above $4.00 a bushel for now.
CHS Hedging and Mike Mawdsley identified a technical support level at $4.20 a bushel, with the latter also saying that March corn was showing a so-called "bull flag" formation, a positive sign.
Certainly, corn for March was 0.6% higher at $4.27 ½ a bushel.
That helped wheat too, which has been depressed in part by ideas that its relatively strong premium against corn, now eroded, has encouraged users to switch grains where possible – an observation supported by US inventory data two weeks ago.
In fact, there is plenty of talk of demand for wheat around at these lower prices, around their weakest in Chicago in more than three years.
Brian Henry at Benson Quinn Commodities noted "talk that China is interested in securing another 200,000 tonnes of wheat with ideas that they will look to the US and/or Australia to find supply.
"It would be interesting to see how aggressively US exporters would be offering the typical Chinese specification for soft wheat."
'Susceptible to damage'
Furthermore, there are some worries over the cold snap hitting the US, where most, but not all, winter crops have adequate snow cover.
"Ideas that areas of US winter wheat production that lack adequate snow coverage are susceptible to potential damage" may be limiting offers, Mr Henry said.
"With cold temperatures over much of the northern hemisphere, attention towards possible damage is merited."
Wheat for March stood 0.7% higher at $5.66 ¼ a bushel in Chicago.
Soft commodities made weaker starts, with raw sugar dropping 0.5% to 15.15 cents a pound for March delivery, and cocoa for March dropping 0.2% to £1,701 a tonne in London for May, the second contract.
Although the recent round of world cocoa grind data had "painted a pretty positive picture", the disappointing US numbers had discouraged buyers, said Eric Sivry, head of agri options brokerage at London-based Marex Spectron.
"It is since the US grind came out - which was a tiny bit lower than anticipated- that players elected to take some profit off the table. It all snow balled into a greater sell-off than anticipated."
Selling has been encouraged by technical factors with Mr Sivry noted a "wall of origin-related offers every time H5 London approached the £1,700-a-tonne mark (about £1,750-1,760 a tonne equivalent in the second month).
"Speculators are still very long, and cocoa specialists came to the conclusion that there was not enough 'oomph' left out there to drill through the wall."