When will the wheat rally end? Maybe when poor news stops coming in over crops in Europe and the Black Sea states which are suffering something akin to first- and third-degree sunburn, respectively.

Small crops get smaller, they say in Chicago. And the German crop has diminished a size over the last month thanks to excessively dry weather, according to the DRV farm co-operative, which cut its estimate for grain output in the European Union's second-ranked producer by nearly 3m tonnes.

The wheat harvest in Russia and its neighbours, meanwhile, is shrinking apace, with analysts at Informa Economics coming in late in the day with an estimate of 94.6m tonnes. That's 6m tonnes less than the US Department of Agriculture forecast only on Friday.

The Russian wheat crop was estimated at 51m tonnes, down 2m tonnes on its last estimate, with Informa's hopes for the Kazakh harvest sliced by 3m tonnes to 11m tonnes.

Ukraine downgrade 

Comparatively, Ukraine got away lightly with a cut of 1m tonnes to 19m tonnes in its wheat crop estimate, although government officials are preparing for a deeper to cut, to judge by reports of a 3.3m-tonne cut to 42.2m tonnes in the official grain harvest estimate, which has already fallen to 19m tonnes.

And investors' attention too, for that matter, with Chicago's expiring July contract putting in quite a swansong to close up 2.3% at $5.48 ¼ a bushel, a six month high, and the September lot adding 1.8% to $5.59 a bushel.

Basis for argument

Not all investors were so impressed, given the rich global stocks of wheat, and soft US cash prices.

"Wheat has advanced to levels that I will not try to explain," Darrell Holaday at Country Futures said.

"There would be an explanation if the basis was showing some signs of strength, but the basis continues to be very weak".

But it's difficult to stop a charging bull, a fact true across the Atlantic too, where Paris wheat for November, the best traded contract, accelerated even faster than its Chicago peer, ending up 2.9% at E166.50 a tonne, the best finish for a nearest-but-one lot since September 2008.

At least its London peer kept pace on gains, to end at a £122.00 a tonne, the best close for a year.

'Yield reductions'

Back in Chicago, wheat's gains lent a positive bias to corn too, helping investors see the bullish side of weather forecasts which, whyle OK for now, foresee hot weather on the way, a negative for pollination.

"Currently it appears that ridges [of high pressure] will come and go," US Commodities said, interpreting forecasts as meaning that "areas that miss rain will see yield reductions".

Corn for July ended up 2.3% at $3.75 ¼ a bushel, while the September lot, the spot contract designate, finished 2.4% higher at $3.84 ¼ a bushel.

New crop November corn added 2.4% to $3.96 ¼ a bushel.

Crush data 

Many of the weather concerns were relevant to soybeans as well.

"Soybeans still have risk premium in for the August weather," US Commodities said.

"The trade remains concerned that in a La Nina year that temperatures will be warm and could steal soybean yields."

Furthermore, industry crush data for June came in at 126.2m bushels, better than the 125m bushels investors were expecting.

Nonetheless, without so much support from the grain complex, the July lot managed only a 5.5 cent rise to $10.36 a bushel, albeit a six-month closing high, with August soybeans ending 2.5 cents higher at $9.97 ½ a bushel.

The new crop November lot closed its discount somewhat, finishing 7.5 points to the good, at $9.62 a bushel.

Cotton unwound

Among softs, cocoa stole the headlines by setting a fresh 32-year high in London.

But cotton was another standout performer, if in a negative sense, falling by 1.30 cents for December delivery to 73.35 cents a pound, its weakest finish in nearly five months.

Cotton, as the basis for consumer goods rather than a consumable, is often more vulnerable to economic sentiment, which took a turn for the worse with weak US retail sales data, down 0.5% last month from May.

Furthermore, the US Federal Reserve trimmed its US economic growth forecast, to 3.0-3.7% from 3.2-3.7%.