How high do dead cats bounce?

Not far, to judge by the action in Chicago futures.

Talk of a Turnaround Tuesday – the idea that Chicago grains and oilseeds reverse on the second day of the week the gains of the previous session – evaporated as early headway subsided.

"The market has a little better tone today, but to call it a turnaround after the losses yesterday would be a stretch," Darrell Holaday at Country Futures said.

US Commodities talked of a "dead cat bounce", market slang for the idea that anything will rebound if dropped from a big enough height.

Softs rally

But the rebound was not, by the close, impressive, with corn doing best of Chicago's big three by ending up all of 1 cent at \$7.38 ¼ a bushel for November delivery, having stood up 8 cents in earlier deals.

Nor was it a reflection of broader markets, which enjoyed a strong day, as stronger-than-expected US retail sales numbers proved a bit of a slow burner in terms of reviving sentiment, helping shares gain 1.1% in London and 2.4% in Paris.

The dollar lost 0.4%, fuelling a revival in the prices of many dollar-denominated commodities by making them more appealing to buyers in other currencies.

Soft commodities had a storming day, with raw sugar adding 1.6% to 20.17 cents a pound in New York for March delivery, while cotton soared 3.5% to a three-week closing high of 74.86 cents a pound.

Cocoa for December gained 2.4% to £1,550 a tonne in London, helped by data showing that the European cocoa grind, while down 16% in the July-to-September quarter, had fallen by less than many analysts had feared.

'Farmers have locked the bin doors'

However, in Chicago, the staple was pressure on prices from funds to sell up, whether or not as a byproduct of Dodd-Frank regulatory changes, as many in the market have speculated.

In fact, farmers retained a tight hold over physical supplies.

"Basis is suggesting farmers have locked the bin doors waiting for higher prices," Paul Georgy at broker Allendale said.

In fact, "corn basis levels in Illinois are at a record for this time of year", US Commodities said, noting that "the truck basis is quoted \$0.45 a bushel over the December futures contract, and trades are occurring at \$0.50-60 a bushel over the December".

Some sales to China

However, funds proved less reticent to sell, whether or not for reasons connected to Dodd-Frank legislation imposing extra restrictions on investor behaviour.

Benson Quinn Commodities said: "Producer selling is now nominal, leaving only the funds to sell into a technically-oversold market".

And they had some fundamental reasons to sell too.

While the US Department of Agriculture reported that the US had sold 110,150 tonnes, equivalent to two cargoes, of soybeans to "unknown", presumed China, this was a fraction of the talk of 15 cargoes of Chinese purchases that some market speculation has mentioned.

US vs South America

In corn trade, Japan bought 250,000 tonnes of the grain from Ukraine corn, rubbing home the US's lack of competitiveness in export markets.

"Currently US Gulf corn is \$8.39 per bushel and Argentina corn is \$7.08 per bushel," Allendale's Paul Georgy said, noting the poor performance of US corn exports so far in 2012-13, besides the talk of US buyers importing from South America.

"Year-to-date corn exports are 39% below a year ago. And if you look at the last four weeks, we are 89% below a year ago."

Nor did technical factors offer bulls much succour, with November soybeans regaining the key marks of \$15.00 (psychologically important) and \$15.04 a bushel (the recent low until Monday) only to surrender them again.

The lot ended down 0.5 cents at \$14.93 ¾ a bushel.

'Near-term forecast looks dry'

It was difficult in these circumstances for wheat to perform any better, despite data showing a poor start to the dryness-hit crop in Kansas, the top US wheat producing state, and delays in emergence of winter wheat plantings nationwide.

In fact, "there is a perception that the hard red winter wheat area received a broad general rain", a factor which would improve development, Country Futures' Darrell Holaday noted.

However, "that perception is not reality. There are certainly still plenty of holes showing up in that map that have a lot of wheat in the ground", in regions such as north west and south central Kansas and eastern Colorado.

"The near-term forecast looks dry for those areas," he added.

Still, wheat for December closed down 0.1% at \$8.47 ¾ a bushel in Chicago, if adding 0.2% to \$8.82 ¾ a bushel in Kansas City, the home of trading in hard red winter wheat.

In Paris, November wheat ended 0.6% lower at E257.50 a tonne, while easing 0.4% to £198.25 a tonne in London.