Corn, soybeans and wheat gained on speculation fund managers will buy agricultural commodities at the start of this year to benefit from improving demand because of economic growth.

Corn will average $4.60 a bushel this year, 11 percent more than the closing price on Dec. 31, said Emmanuel Jayet, head of agricultural research at Societe Generale in Paris and the most accurate forecaster based on estimates compiled by Bloomberg at the end of 2008.

"With the start of the new year, buying from investment funds, especially index funds, looked strong for the grains and oilseed complex, which lagged behind last year's gains among commodities," said Toshimitsu Kawanabe, an analyst at Tokyo- based commodity broker Central Shoji Co.

Eoin Treacy's view The grain and oilseed complex was a notable underperformer in 2009; spending the majority of the year ranging in the region of the upper side of the prior lengthy base formation while other soft commodities, industrial and precious metals pushed higher. This consolidation followed the collapse from the 2008 highs which saw the price of food become a highly political issue.

Long-term charts of corn, soybeans, wheat, oats and rough rice share a high degree of commonality, which is not explained by growing conditions in any one particular country. This similarity, where all have found support at historically high nominal levels suggests that underlying global demand for food has reached a new, higher, plateau.

Prices of corn, soybeans, wheat, oats and rough rice have all been trending steadily higher since October. This move has been characterised by a progression of rising reaction lows which would need to be broken to negate indications that these commodities are under accumulation. None have yet broken upwards from their yearlong ranges but provided the sequence of higher lows remains intact, this would appear to be only a matter of time.

Fertiliser companies should be beneficiaries of strength in grains and oilseeds. Agrium broke upwards late last year and continues to hold above C$60. A sustained move below that level would now be required to question potential for further upside. Mosaic has a relatively similar pattern, having successfully broken above $55 in late November. Potash Corp of Saskatchewan encountered resistance near C$130 in December but found support above C$110 and would need to sustained move below that level to question potential for additional higher to lateral ranging. K+S broke upwards from the six-month range in late November and retested €40 in late December. Yesterday's upward dynamic and today's follow through suggest demand is returning and a sustained move below €40 would now be required to hinder potential for further upside. (Also see Comment of the Day on December 14th)