Advantage soybeans.

The oilseed had been the weakest of Chicago's big three crops in the run-up to Wednesday's US Department of Agriculture key Wasde report, falling in five successive sessions from last week's record highs.

But it emerged the strongest from the report after the USDA cut more than expected from its forecast for the US crop, while keeping its estimate for stocks at the close of 2012-13.

US soybean exports for the season will fall 55m bushels below previous forecasts "mainly due to reduced supplies", the USDA said – for which read demand rationing, implying elevated prices.

Investors certainly took it that way, driving the November contract back up 2.4% to \$17.42 ¾ a bushel with some 45 minutes of Chicago trading to go, wiping out most of the losing run.

'Prices must move higher'

"There is nothing in today's report to spark soybean liquidation. In fact, we believe end users will be more inclined to extend coverage," Richard Feltes at RJ O'Brien said, terming as "daunting" the level of rationing needed to balance demand with drought hit supplies.

Rabobank was unequivocal in the Wasde's "bullish" implications for soybean prices, saying the "incredibly tight supply situation for US soybeans will keep Chicago soybean prices at or near record levels".

The data "will allow the Chicago soybean price rally to continue into the coming quarter in order to ration demand", besides factoring in some production risk for South America, where Brazilian dryness ahead of sowings is raising concerns.

Ethanol hit too

But the data for corn, for which the Wasde surprised investors by raising rather than lowering its forecast for 2012-13 carryout stocks, were less well received by bulls.

"Fund longs in corn may be less inclined to maintain positions with diminished odds of \$9.00-a-bushel corn," Mr Feltes said.

Benson Quinn Commodities said: "The speculative community is finding out that they bought too much corn above \$8.00 a bushel."

Furthermore, a separate batch of data, on US ethanol production, were downbeat too, pegging output at an average of 816,000 barrels a day last week, a six-week low, while inventories rose to a six-week high of 18.9m barrels.

Acres question

Corn prices might have fallen further were it not for doubts over the data, particularly over the USDA's decision to stick with a figure for harvested area of 87.4m acres, which many investors believe looks to high, given drought damage to crops.

"We still anticipate a lower corn production estimate in the final tally, when corn acres lost to drought are fully accounted for," Gail Martell at Martell Crop Projections said, noting that in the last big drought year of 1988, some 14% of the crop was abandoned or ended up as silage.

At Country Futures, Darrell Holaday said: "We feel todays numbers will take the sub-10bn-bushel crop idea out of play. It is just not likely we will see a drop of more than 700m bushels from today's number.

"A 10.2bn-10.3bn bushel crop is certainly within reach."

Corn for December dropped 1.2% to \$7.68 ¼ a bushel.

'Major risk to bears'

And corn dragged wheat with it too for a while, before investors began to question some of the non-changes in the Wasde estimates, notably for the Australian and Argentine crops.

The USDA left its estimate for the Australian crop at 26.0m tonnes, 3.5m tonnes above the forecast on Tuesday from the country's own Abares crop bureau.

"The ongoing Australian dryness represents a major risk to wheat bears - ditto for water-logged Argentine wheat," RJO'Brien's Richard Feltes said.

Rabobank termed as a "key bullish risk in future Wasde" reports the threat of a lowered Australian wheat production estimate.

Chicago's December wheat contract added 0.6% to \$8.89 a bushel.

'Anaemic demand'

In fact, the crop which came off worst from the Wasde was cotton, for which the USDA cut its forecast for domestic production, by 54m bales, but offset the boost to prices by cutting its export hopes, thanks to downgraded ideas on world import demand.

Indeed, the forecast for world stocks was raised 1.8m bales further, to a record 76.5m bales.

"The futures market in New York was lower following the report, and we continue to anticipate the anaemic demand and large  oversupply to weigh on prices in the next quarter," Rabobank said.

New York's December contract stood 2.2% lower at 73.27 cents a pound.

Sugar gains again

However, raw sugar put in a fourth successive day of gains, adding 1.4% to 19.72 cents a pound, shrugging of yesterday's Unica data showing a strong Brazil Centre South cane crush in the second half of last month.

"Unica numbers caused little surprise and were written into prices already," Nick Penney at Sucden Financial said.

"What may be lending support is the macro-economic climate with a weaker dollar helping commodities," and a German court decision allowing Berlin to ratify the European Stability Mechanism also relieving investors.