Crops headed into late trade in Chicago on flying form lifted by matters general – a fine day for external markets – and particular, in the growing fears over global grains production.

Wheat hit its highest for five months in Chicago, while setting fresh one-year closing highs in London and Paris.

Investors showed they had recovered their appetite for riskier assets by snapping up shares, which added 1% in London and added more in New York as of 17:30 GMT, and oil, which rose 2.6% to $73.81 a barrel.

But they had an extra reason to buy into farm commodities, after the US Department of Agriculture unexpectedly lowered its assessment of the condition of America's corn crop by a couple of percentage points to 71% (as in the levels rated "good" or "excellent").

"That did catch some of the market off guard," Darrell Holaday, at Country Futures, said.

Soybean and spring wheat ratings were cut by 1%.

'Development slowed' 

Sure, the overall ratings were still pretty promising. But they signalled that some of the humungous yields that analysts have been talking about may no longer be on the cards.

And digging into the data revealed further signs of disappointment.

"Corn crop development seems to have slowed with 8% of the crop silking compared to 19% at this time last year," Benson Quinn Commodities said (silking being a key part of the pollination process).

"Soybeans are struggling as well with 8% of the crop blooming compared to 23% last year".

US Commodities added: "The corn crop rating was cut in both the north and south. It is too wet in the north and too dry in the south."

Corn for July stood 2.7% higher at $3.69 ¾ a bushel, while in soybeans, new crop lots clawed back some of the discount gained on data last week showing higher-than-expected US sowings.

The November lot added 2.6% to $9.23 ¼ a bushel, ahead of the old crop July contract, which added 1.8% to $9.81 ½ a bushel.

Australia alarm bells

And what of wheat? The grain, which lagged in early deals, overtook its Chicago peers with ease, soaring 4.1% for July delivery to $5.13 a bushel, its highest since mid-January.

Chicago investors were encouraged by their European peers, who are closer to the crucible of the current rally –worryingly dry weather in northern Europe and Russia.

Paris wheat added 2.2% to E160.75 a tonne for November delivery, while London's contract for the same month gained 1.1% to £118.60 a tonne

And, indeed, the bullish news kept on coming, with Western Australia, Australia's biggest wheat producing state, saying that forecasts for its crops were too high, following record low rainfall in many farming areas.

That could ring alarm bells with investors who, as UK grain merchant Frontier reminded us last week, remember that it was problems in Australia which lit the dry tinder of the price spike from 2007 onwards.

Coffee overreaction? 

Among softs, coffee enjoyed a better day, perhaps stirred by Commerzbank warnings after a dire performance in the last session.

The fall in New York arabicas on Tuesday to 155.5 cents a pound put it "at a price only moderately above the justified level", the bank said.

"There is now a risk that the market will overreact on its way down."

Since Colombia's supplies are still challenged, and Brazilian arabica beans are not admitted for delivery in New York, prices should theoretically remain supported there.

New York's July lot ended 3.3% higher at 160.65 cents a pound.