Australia & New Zealand Bank urged caution – for now - among investors expecting gains in agricultural commodity prices, flagging factors such as a weak Brazilian currency, and slow economic growth in capping values.
The bank said that it expected prices of commodities overall "to improve in the coming months", helped by signs of improving economies in the US and China, a huge buyer of raw materials, which "appears to be turning the corner".
"China's headline numbers are showing some signs of improvement," ANZ said, flagging "quite strong" commodity imports, which for September showed iron ore volumes at their second highest ever, while revealing strong wheat buy-ins too.
And the bank acknowledged a "positive medium-term price outlook" for grains, foreseeing Chicago corn heading back towards $8 a bushel next summer, and wheat standing above $9 a bushel in the spring.
'Strong incentive to sell aggressively'
However, for the short-term, "better gains" in base metal and energy markets, which have been more highly sold of late, feeling the brunt of a $20bn liquidation by funds last month, will contrast with "potential softness in higher-priced agricultural markets".
"End users are facing higher costs against a backdrop of weakening economic conditions in Europe, while in the US, the drop in crude oil prices and seasonally weaker gasoline prices has cut corn demand for ethanol."
The weak Brazilian real also represented a setback to many markets, in boosting the value to the nation's farmers, big producers of the likes of coffee, soybeans and sugar, of dollar prices for the commodities as traded in Chicago and New York.
"With the Brazilian real at a three-and-a-half year low against the dollar, it creates a strong incentive for local producers to sell aggressively into global markets," ANZ said, noting that the country's exports last month set records in both corn and sugar.
A record Brazilian safrinha, or winter, corn crop "and a weak real is ensuring Brazil is an aggressive seller in the export market.
"Brazil has both the export capacity and supply to continue to export corn at record levels for several months."
Separately, broker Benson Quinn Commodities flagged "steady" premiums on export markets, with "Brazilian corn offered at a $22-a-tonne discount to the US, while Argentine corn is another $5-a-tonne cheaper".
'Sell into any price strength'
And ANZ said it was moderately bearish on soft commodities too, flagging "underwhelming" dynamics in the cotton market, with the supply overhang from a Chinese stockpiling exercise last season "now estimated to be above 5.5m tonnes", and price pressure due from Indian exports coming on line.
That cotton prices are "showing remarkable resilience" in staying above 70 cents a bushel, a factor which has puzzled many analysts, was largely down to standing close to fair value compared with values of artificial fibres.
"Overall, we'd look to sell into any price strength above 75 cents a pound."
And, for raw sugar, the bank forecast prices staying around 21 cents a pound or below for the next year, sapped by a "diminishing risk of weather interrupting the tail end of Brazil's cane harvest.
"The risk premium from previously expected weather-related supply disruptions in Brazil's Centre South is being removed from prices.
"Strong cane crushing volumes in the first half of October and dry conditions forecast through to mid-November should mean only marginal volumes are left to be harvested then."
However, the bank placed a "neutral" call on oilseeds, saying prices of soybeans "should continue to find support above $15.00 a bushel near term", with world supplies tight ahead of South America's early-2013 harvest.
And it said weakness in corn could prove a buying opportunity, with prices set for a sharp revival as US supplies wane ahead of the 2013 harvest.
"With short-term fundamentals pressuring grain prices, we see this as an opportunity to position for our positive view on prices into next year," ANZ said, recommending a purchase of May corn futures, hedged against a sale of the December lot.
"The underlying tightness in grain markets has yet to be felt, and will only become fully apparent in the first half of 2013."