How would grains and oilseed greet the start of the big day?

Thursday will bring later, at 13:30 UK time (07:30 Chicago time) the October version of the US Department of Agriculture's Wasde crop report, which promises to be an especially important one.

In part this is because analysts have a huge range of forecasts for the briefing's most anticipated data, on US corn and soybean yields, meaning that the USDA's estimates stand to end an awful lot of uncertainty.

In part too, the report is especially important as harvests are so far along, a factor expected to allow the USDA to get a closer idea than normal, for the time of year, of the final crop size, giving the briefing extra importance.

It also opens the way for sizeable revisions, with the USDA potentially feeling more comfortable than normal, given the late stage of harvests, to push the boat out a little.

And that has been an extra pressure on soybeans, for which the Wasde is expected to see a sizeable rise in the production forecasts.

'Very bearish sign'

But have investors gone too far in selling the oilseed?

The last session was deemed by traders as "ugly" for soybeans, pressed by hefty bank selling of call options priced at \$15.00 a bushel, signalling protection for producers worrying that prices are set for a further decline.

Soybeans finished at a three-month closing low, and below their 100-day moving average for the first time in four months.

"Another close below the 100-day would be a very bearish sign," Mike Mawdsley at Market 1 cautioned.

Reputation for surprises

Thursday, however, opened with soybeans on the front foot, amid ideas that maybe investors had already factored in too much of a negative surprise on the harvest.

"The market is expecting a bearish set of numbers, mainly tied to expectations for an upward revision to US soybean production, but the USDA has a knack of taking the market by surprise," Luke Mathews at Commonwealth Bank of Australia said.

At RJ O'Brien, Richard Feltes said: "We suspect end users will be more prone to extend forward coverage after the report, while producer longs will be prone to hold tight into New Year."

Chicago soybeans for November added 1.1% to \$15.40 a bushel as of 09:00 UK time (03:00 Chicago time).

That was not enough to put them back over their 100-day moving average, at a little over \$15.43 a bushel, but at least it kept them well above the recent low of \$15.04 a bushel which is seen as key technical floor.

'Widespread rain'

In another sign of the market's reversal, it was wheat, the strongest of Chicago's big three of late, which fared worst in early deals, falling 0.3% to \$8.67 ¾ a bushel for December delivery.

The drop was down to more than the unwinding of spreads with soybeans, with hopes for the Australian crop expected to take a star turn in the Wasde given a boost by some late rains.

The USDA is widely forecast in the Wasde to cut a forecast for the Australian crop of 26m tonnes which is way out of line with, lower, estimates from other commentators.

"Widespread rain fell through central west New South Wales overnight with falls of 5mm-10mm common," Mr Mathews said, noting that "similar totals were recorded across parts of the South Australia wheat belt and southern Victoria.

"The rainfall is welcome for reproducing and filling grain and oilseed crops."

That said, worries for the crop are not over, with Western Australia still "dry, and the mostly-dry eight-day outlook suggests further crop downgrades will occur in the west".

Corn pressure points

Corn, meanwhile, took its normal pace in between corn and soybeans, with a gain, but only of 0.1% to \$7.37 ¼ a bushel for the December contract, ahead of an important Wasde report for the grain too.

"Bears will be looking for increased production on greater yields and evidence that demand destruction has taken place with reductions in corn use for feed ethanol and exports," Brian Henry at Benson Quinn Commodities said.

"Bulls will be looking for steady to reduced yield estimates on fewer harvested acres and evidence that demand destruction has yet to take place."

Ideas for demand have not been helped by a series of announcements from Mexico, one of the biggest buyers of US corn, of opening up to imports from South America, with Brazilian supplies approved and consent for Argentine grain in the pipeline.

Spain downgrade

For many other markets, investors were more concerned with macroeconomic issues, and in particular Standard & Poor's cut of two notches to Spain's credit rating.

While only bringing S&P in line with Moody's, the move refocused attention on Spain's debt problems, and gave many markets a negative start.

Shares closed lower, by 0.6% in Tokyo, 0.8% in Seoul and the same in Shanghai, while the safe haven of the dollar edged higher.

And soft commodities got in with the mood, with raw sugar for March losing 0.6% to 21.14 cents a pound in New York, where cotton dropped 1.2% to 71.22 cents a pound.