Will corn close at a level it has not done for nearly three months?

That is, finish below the 50-day moving average, for the benchmark December contract.

In early deals, at least, the grain was defying negative moves on outside markets to remain above this key technical line, which stands at some \$7.83 a bushel.

Shares put in a soft performance, falling by 0.7% in Tokyo, 0.2% in Seoul and 0.7% in Shanghai, amid jitters ahead of the Federal Reserve's monthly meeting, and with a German court ruling on the legality of the eurozone's rescue fund expected later this week.

And, among soft commodities, New York raw sugar eased too, falling 0.2% to 19.40 cents a pound as of 08:50 UK time (03:50 Chicago time, 04:50 New York time), ahead of data later from Unica on the progress of the Brazilian Centre South cane crush for the second half of August.

"Another strong production result is expected because of favourable crushing weather," Luke Mathews at Commonwealth Bank of Australia said.

'Caught flat-footed'

But corn made a little ground, adding 0.4% to \$7.86 a bushel for December delivery, to keep the 50-day moving average at bay, although with grains and oilseeds facing key data too, with the prospect on Wednesday of the US Department of Agriculture's latest Wasde report, it was difficult to gauge the sustainability of the gains.

After all, the declines in the last session surprised many investors, with periods ahead of reports often seeing little movement.

"The portion of the trade, including me, that was expecting range-bound trade as we approached the report got caught flat-footed on Monday's break," Brian Henry at Benson Quinn Commodities said, noting that speculators appear to be getting picky about what they purchase.

"The issue with recent price action is the fact that the row crop markets have not been able to sustain rallies.

"It seems the speculator is still interested in buying strength, which has resulted in this group having to liquidate newly established longs as upward momentum wanes."

Indeed, a trade below the 50-day moving average "would set the market up for more fund selling".

Signals from history

And there are historical reasons why investors might be cautious about buying too much ahead of a September Wasde.

"I suspect end users will be cautious in bottom picking the market ahead of a September crop report where trade has underestimated USDA corn production in 11 of last 14 years," Richard Feltes at RJ O'Brien said.

That said, "the USDA's September corn production figure was below the average trade guess in each of the last two years that posted below-trend yields", with 2012 being another poor cropping year, Mr Feltes added.

Furthermore, he noted that corn should at least be thinking of outperforming wheat.

"A corn/wheat seasonal kicks on Tuesday, with corn showing a strong tendency to gain over wheat for the next 60 days."

Australia downgrade

At Market 1, Mike Mawdsley looked at it another way. "The seasonal trade is to sell wheat on Tuesday.

And indeed Chicago's December lot dropped 0.1% to \$8.89 ¼ a bushel.

This despite a cut of 1.6m tonnes by Abares, the Australian commodities bureau, to 22.5m tonnes in its forecast for the domestic crop.

The drop below last year's record harvest "reflects relatively dry seasonal conditions in Western Australia and some parts of south eastern Australia", Paul Morris, Abares executive director, said.

Sure, the downgrade took the forecast below the consensus estimate for the crop of more than 23m tonnes, on a Bloomberg poll last week, with Rabobank cutting its forecast to 22.8m tonnes.

But the impact of the cut was muted by an upgrade to the Abares estimate for Australian wheat exports, regardless, by 1m tonnes to 21.5m tonnes.

As another data point for wheat-watchers to look out for, Egypt is set mid-afternoon UK time, mid-morning in Chicago, to unveil the results of its latest tender, against a backdrop of Black Sea supplies losing the export competitiveness which has gained them a stranglehold on Egyptian tender victories so far into 2012-13.

'More beneficial to yield'

Soybeans, meanwhile, retained their place at the bottom of the Chicago pile, shedding 0.2% to \$17.16 ½ a bushel, after USDA data overnight showed the condition of the US crop improving.

The proportion rated in "good" or "excellent" condition rose two points to 30%, touching a sensitive point, with many investors musing on the extent that recent precipitation has repaired crop damage from drought.

Mr Feltes noted "talk that soy harvest still 10-14 days off, suggesting that late summer rains were more beneficial to yield than initially imagined".

Furthermore, there is talk in Chicago of China cancelling several soybean orders, a factor which itself is hitting a nerve, after Beijing data on Monday showed a sharp decline last month in imports of the oilseed.