Technically, Chicago crops appear primed for further weakness.

In the last session, November soybeans, the benchmark contract, closed back below their 20-day moving average, while December corn and wheat fell below their 50-day lines.

In the case of corn, it was the first finish below the 50-day moving average in nearly three months.

"Today's convincing move below the 50-day average has the charts looking weak and the corn market feels vulnerable at these levels," Brian Henry at Benson Quinn Commodities said.

And, after all, as Mike Mawdsley at Market 1 said, "September is typically a month of price erosion for corn, wheat, and beans, and we certainly saw that on Tuesday", when prices of all three declined.

'Key focal point'

What appears likely to determine whether there will be more liquidation is the main event for agricultural commodity watchers, the US Department of Agriculture's Wasde crop report, out at 13:30 UK time (07:30 Chicago time), giving revised forecasts for world supply and demand.

Of particular interest will be the estimates for US corn and soybean harvests, after drought caused severe damage to yields.

"We expect another downgrade to global wheat supplies, but the USDA's US corn and soybean production estimates will be the key focal point," Commonwealth Bank of Australia's Luke Mathews said.

But how much damage did the dryness cause?

'Liquidation trigger'

For corn, traders expect a further cut of 400m bushels, to 10.38bn bushels, in the production forecast, reflecting a further cut to yield (120.6 bushels per acre) and to the forecast for the harvested acreage.

Higher abandonment levels are expected to bring the area harvested down to 86.2m acres, 1.2m acres below the current USDA estimate.

For soybeans, the production forecast is expected to be trimmed by 35m bushels to 2.66bn bushels, comprising in the main a reduction to 35.8 bushels per acre in the yield, from 36.1 bushels per acre.

Production estimates above these levels could have notable downward implications for prices, traders have warned, mindful of the steep drop in values which kicked off in late August last year.

"An unchanged or higher corn yield than the USDA's Aug forecast of 123.4 bushels per acre —against a backdrop of eroding technicals—would trigger more liquidation," Richard Feltes at RJ O'Brien warned.

Quality factor

And there is a growing idea that the soybean yield estimate, at least, may not be cut as analysts have forecast, and may even be raised, following relatively encouraging results from the early oarvest.

Mr Feltes noted a "trickle of better-than-expected new crop yield updates although seasoned traders remain cautious about reading too much into early returns.

"Conversely, far more numerous corn yield updates continue to suggest extraordinary yield variability and markedly lower-than-average returns."

Quality is being increasingly raised as an issue for corn too, with some findings of significant levels of toxins left by fungal infections which spread through drought-stressed crops.

"Aflatoxin will continue to be an area of interest in this year's crop," Benson Quinn's Mr Henry said.

"Cases are being reported early as elevators and processors are actively testing new crop samples. There is hope that the earlier crop was affected more than the late crop, but that may be a dream of the end user."

Prices rise

Crop investors' reaction early on Wednesday to the prospect of the Wasde was to raise values.

But this was following declines in previous sessions - in soybeans' case five successive negative finishes.

Furthermore, the default position for risk assets was up, amid increased hopes that the US central bank will introduce a third round of ultra-easy monetary policy to boost the economy, and with hopes that China will support its flagging growth too.

Shares rose 1.7% in Tokyo, 1.6% in Seoul and 0.8% in Sydney overnight.

In Chicago, December corn added 0.4% to $7.80 ¾ a bushel as of 08:40 Uk tiem (02:40 Chicago time) and wheat 0.2% to $8.85 ¾ a bushel.

Soybeans, the weak pit of late, rebounded 0.7% to $17.13 ½ a bushel for November delivery.

Harder softs

And the gains even extended to New York raw sugar, which added 0.2% to 19.47 cents a pound for October delivery, despite Tuesday's data from cane industry group Unica showing a continued acceleration in the Brazil Centre South cane crush.

As Lynette Tan at Phillip Futures noted, "perfect weather in the last two weeks of August allowed Brazil's major cane belt in the Centre South to churn out record 3.34m tonnes of sugar in the fortnight, up 12.4% from the same period last year".

New York cotton for December gained too, adding 0.8% to 75.49 cents a pound.

But for how long?

"Cotton traders are cautious ahead of tonight's USDA Wasde report, which may include another downgrade to global cotton demand, and Thursday's US Fed policy announcement which is expected to include the rollout of a third round of quantitative easing," CBA's Luke Mathews said.