Crops continued their rebound on Tuesday. But traders continued to believe the revival was driven by nothing more than short-covering ahead of a much-watched US Department of Agriculture report due later.
"There did not appear to be any change to the fundamental outlook of the market to begin the week ,other than another winter storm moving through the[US] Midwest, which is expected to slow the movement of truck and rail shipments once again," Jon Michalscheck at broker Benson Quinn Commodities said.
The real focus of attention was the USDA's monthly crop supply and demand report, which is expected to reduce estimates for American crop inventories at the end of 2009-10, and to raise forecasts for Argentine and Brazilian soybean harvests.
"Most [observers] will look for a cut in soybean carryout for this year, but also a big South American soybean crop coming on," Mike Mawdsley at Market 1 said.
Benson Quinn's Kim Rugel said: "Trade anticipates USDA to adjust Brazilian and Argentine crop estimates upward due to near-ideal growing conditions in January."
That said, there is a potential joker in the pack – the spread of fungal disease which has also been encouraged by South America's rain, as Tim Hannagan at PFGBest pointed out.
"The extreme levels of rain from El Nino, up to 500% of normal in some areas, have Argentine growers talking of a record [outbreak of] leaf spot disease," he said.
And, with the USDA's January report stunning markets, and sending crop prices significantly lower for the following three weeks, investors have, in the run up to the February data, been taking a cautious approach.
For many, that means closing short positions built up especially in wheat, and taking a fat profit.
While Chicago wheat for March was 1 cent higher at $4.85 a bushel at 08:00 GMT, it has still, nonetheless, lost 15% over the last month.
March corn, which has also lost 15%, was 2 cents higher at $3.58 a bushel. Soybeans, which have lost a more modest 6%, added 6 cents to $9.35 ½ a bushel.
Crude oil was also in crops' favour, adding 0.4% to $72.14, so improving the case for fuels produced from agricultural commodities.
The dollar eased too, notably against the euro, which was worth $1.3730, meaning it had recovered nearly 2 cents from Friday's low, so improving the export competitiveness of agricultural commodities denominated in dollars.
In Kuala Lumpur, palm oil maintained its upward run, hitting its highest for nearly a month, amid hopes for a key report on Wednesday, when the Malaysian Palm Oil Board unveils monthly export, production and stocks data.
While the last report showed inventories at a 13-month high, this jump has been attributed in part to a knock-on effect from Indonesia, the top-ranked palm producer, where many companies accelerated exports to escape levies imposed last month.
Traders believe that Malaysia's inventories will, in Wednesday's report, tumble by 11.7%, encouraged by exports to China ahead of its imminent New Year celebrations.
Benchmark April palm oil stood 6 ringgit higher at 2,556 ringgit a tonne, having touched 2,570 ringgit earlier.