It was soybeans which took up the baton in Chicago on Thursday, as grains paused for breath after their recent upward runs.

Investors appear increasingly to be looking for direction at the US Department of Agriculture's long-awaited reports due next Thursday, on domestic grain stocks left over from the last crop and prospective plantings for this year.

While markets have made some allowance for a low (March 1) stocks figure corn, of potentially below 5bn bushels, compared with 6.0bn a year before, the dwindling inventories of soybeans have taken something of a back seat.

The dynamics of rival South America supplies, and concerns over Chinese demand, have overshadowed activity somewhat.

China concerns ease

However, fears over China were eroded on Thursday by further gains in prices on the Dalian exchange, up 0.8% to 4,779 yuan a tonne for soybeans themselves, and by 0.8% to 8,146 yuan a tonne for soyoil and 1.1% to 3,272 yuan a tonne for soymeal, for September delivery.

China had some good economic news too, with the HSBC purchasing managers' index for March recovering to 51.7, up from 50.4 in February.

That helped many assets post gains, including London copper, which edged 0.4% higher in early deals, besides shares which closed 0.3% higher in Shanghai.

In Chicago, it helped investors focus back on the picture of tight supplies for US soybeans, which may be even more snug than they had appreciated.

'Strong tendency'

Richard Feltes at RJ O'Brien, the Chicago-based broker, returned to the last key USDA report, the Wasde world crop supply and demand briefing on March 8, and a trend of underestimating consumption.

History reveals a "strong tendency for USDA to underestimate final soybean demand on the early March report".

Over the last 20 years, only once, in 2011, did the USDA in March overestimate consumption.

Last year, the briefing was nearly 150m bushels shy of the actual result.

"The take-home point here is that even though USDA appears reluctant to lower its estimate for US soybean stocks at the end of 2012-13 below the 125m bushels area, history would suggest that further reductions in US soy stocks are likely," Mr Feltes said.

Data later

May soybeans gained 0.8% to $14.30 ½ a bushel in Chicago as of 09:20 UK time (04:20 Chicago time), just above the 100-day moving average.

How it fares in taking that point could be one pointer as to whether the contract can hang on to gains, as well as weekly US export sales data, expected at 300,000-600,000 tonnes old crop, and 150,000-400,000 tonnes new crop for the oilseed.

A week ago, the result was a combined 784,000 tonnes.

For corn, investors are expecting anything from zero (optimism has rarely been rewarded on corn sales this season) to 250,000 tonnes for old crop, and 50,000-400,000 tonnes for new.

Last time, the figure was a combined 654,000 tonnes.

And for wheat, forecasts range from 450,000-800,000 tonnes old crop, and 100,000-320,000 tonnes new, compared with a combined 1.1m tonnes the previous week.

'The major issue…'

Not that investors are getting too excited on wheat's prospects, with the grain unchanged at $7.36 a bushel for May delivery, having already gained more than $0.50 a bushel from an early March low.

And the US has certainly not done so well in the headline import deals unveiled so far this week, from the likes of Algeria.

Still, "the major issue to be discussed at the moment is the amount of wheat that will be fed", Jonathan Watters at Benson Quinn Commodities said, noting that the existing USDA estimate of 375m bushels over 2012-13 was already historically high.

"The US has fed substantially more than 400m bushels only once, the 481m bushels in 1990-91."

Balance sheet questions

Doubts are being provoke by the idea that wheat "priced itself out of the ration for much of the year, as up until February prices", when compared with corn's, "didn't encourage new demand", Mr Watters said.

"Does the USDA number already account for a ramped up pace of wheat feeding late in the year, or will the USDA have to increase its 2012-13 feeding estimate?

"Will it show up on the March stocks report, or will it have more of an impact on the new crop balance sheet?"

While there "are no easy answers to these questions", investors holding profitable positions "appear to be taking some risk off the table in front of what is turning into an important USDA report".

Separately, there appears to be no further movement in thoughts on the cold spell which is forecast for the US Plains this weekend, posing a threat to winter wheat seedlings.

May vs December

As for corn itself, Chicago's May contract stood unchanged at $7.32 ½ a bushel, stalling towards the upper end of a price corridor it has trod for this year.

Signally, it lost a smidgen of ground to the December contract, which has taken the rap for ideas of a huge US crop on its way, losing 10% in 2013 as of early March, before staging a recovery on ideas that plantings will not be as high as had been thought.

Informa Economics will release fresh sowings estimates on Friday, expected to show a swing from corn to soybeans.

At broker Market 1, Mike Mawdsley noted that "some say they think corn acres will be down by 2m and soybeans up 2m", also flagging a technical support for the December lot with it having broken above a downtrend line in the last session – albeit only to face another chart point.

The December contract stood up 0.1% at $5.67 ¾ a bushel, 1 cent short of the 23.6% retracement point from the August high, a key Fibonacci level.

Softs harden

Among soft commodities, raw sugar maintained its shallow recovery from Monday's drubbing, little helped by an upgrade by Cznarnikow above 9m tonnes in its estimate for the world production surplus in 2012-13.

New York's May contract gained 0.2% to 18.39 cents a pound.

New York cotton for May eased 0.3% to 88.85 cents a pound, despite an effort by industry officials in China to assuage concerns that a sell-down of state stocks would depress values.

The China National Cotton Information Centre said that prices of state cotton offered for auction would be far higher than those on the international market.