Corn was a four-letter word for farm commodity bulls, and external markets a more elongated swear phrase, on what was a dire day for prices of most crops.

Investors fled riskier assets on growing fears of a fresh wave of global economic weakness, concerns stoked by a 27% slump, to a 15-year low, in sales of previously-owned homes in the US.

Interestingly, it was bonds which felt the benefit, sending yields on German, UK and US bonds to record lows. The dollar itself, often counted as a safe haven, lost early gains.

Most commodities didn't fit the bill of citadel either. Oil shed more than 2%.

Twice cursed 

But that was small beer compared with what some food commodities came up with, including corn which, as Jerry Stowell at Country Futures said, "got a double stab", being hurt by data overnight showing a surprise improvement in the condition of America's crop.

"The heat did not hurt the crop," US Commodities said. Indeed, it looks on course for an early harvest adding forthcoming harvest pressure to the crop's woes.

"About 4bn bushels of corn will mature by September 15. This is twice the amount a year ago," the broker said.

The grain had pieces of good news, such as the forecast for heavy rain in some growing areas in China, where rising prices of the grain have already bought it back into the fold of importers.

"Debates continue on the size of China's corn crop.  Trade sources believe it is 160m tonnes versus the USDA at 166m tonnes," US Commodities said, with concerns based on reports of flooding in north eastern regions.

But while there were enough buyers to prevent Chicago's September contract staying for long below $4 a bushel, they could not prevent the lot ending down 2.9% at $4.05 � a bushel.

Weather factors 

And this time, the grains moved in sympathy, with corn's hardships adding to the pressures on wheat from a dearth of fresh bullish news.

"Wheat lacked fresh bullish news from Russia and triggered some profit-taking," Benson Quinn Commodities said.

Indeed, what news there was from Russia was bearish, with some areas receiving rain, and more forecast, so improving conditions for autumn sowings. The outlook for dry Western Australia looked better too.

Nor were fears of an early frost in Canada, where crops are developing late, concerns which have formed something of a bullish undercurrent of late, at large, allowing Chicago wheat for September to close down 2.5% at 6.74 � a bushel, more than wiping out Monday's gains.

Europe resilient 

Intriguingly, losses were nowhere near as severe in Europe, where Paris wheat ended down 0.2% at E213.75 a tonne for November delivery, an outperformance reflecting the region's export success in some recent tenders, including Jordan and Tunisia on Monday.

The region continues to attract crop downgrades too, with US Department of Agriculture foreign staff pegging the European Union wheat harvest at 135.5m tonnes, 2m tonnes below the department's official forecast.

And its not just quantity which is the issue but quality, with rain-delayed harvests in Germany and the UK increasing expectations of more milling wheat being downgraded to feed.

Indeed, London feed wheat for November underperformed its Paris peer, falling 2.1% to �146.75 a tonne.

... or is it? 

Still, it was not such plain sailing throughout the Paris complex, as a trader at a leading European commodities house pointed out, noting the relatively steep fall in further away contracts.

The January 2011 contract, for instance, dipped 1.2% to E208.25 a tonne, extending its discount to the November 2010 lot above E5 a tonne.

"A week ago that gap was about E2 a tonne," the trader told Agrimoney.com.

"The interest is in immediate supplies. Merchants are not interested in committing themselves beyond 6-8 weeks."

Below $10

Soybeans stood relatively firm, even if their marginal declines did lose them a key psychological point of $10 a bushel. Chicago's September lot ended down 0.7% at $9.99 � a bushel, with the November contract shedding 0.7% to $9.99 a bushel.

But then the feeling was that the oilseed may have gained were it not for the weakness in its peers, given the lower condition ratings revealed in the USDA's latest weekly crop progress report.

"Beans started the session higher, with crop ratings dropping 2% to 64% 'good' or 'excellent' and forecast for the next two week stretch expected to be one of the driest of the summer," US Commodities said.

"But pressure from weaker corn, wheat and crude turned the complex lower."

'Much-needed correction'

There were few such kind words in the soft commodities markets for coffee, which plunged 8.1% to 166.85 cents a pound for New York's September arabica contract.

London robusta beans for September tumbled 7.8% to $1,600 a tonne, their weakest finish for two months.

Shawn Hackett, president of US-based Hackett Financial Advisors, said the downswing was "a much-needed correction in coffee", adding:  "It's got more to go before we get back into a healthier position."

Ralph Hawes at Sucden Financial noted funds' combined net long positions in London and New York of some 110,000 contracts, equivalent to 26m bags of coffee, or more than one-quarter of global imports � "quite a position".

"Having finally broken the uptrend there is still room for further losses in New York with the next target area 167.00 cents a pound. London may also look lower, towards $1,550-80 a tonne," he added.

Bounce back 

Sugar investors were more forgiving, allowing the sweetener to recover losses and post the positive close which had looked a dead cert on Monday, when New York's October contract closed above 20 cents a pound for the first time, for a spot lot, since March � a feat viewed as ushering in a new era of fund buying.

Helped by talk of weather threats to sugar crops in Germany, Pakistan and Russia, the lot recovered to end 0.5% higher at a fresh five-month high of 20.16 cents a pound.

London white sugar for October closed down 1.4% at $569.90 a tonne.