The dreaded profit-taking returned to spoil wheat's upward run, and help put corn on the back foot too in early deals on Tuesday.

There was some positive news for bulls to latch on to, with US Department of Agriculture staff in the European Union cutting their estimate for the EU wheat crop to 135.5m tonnes, below some other forecasts, noting wet harvest weather.

It was a similar story in Canada, where the harvest is only 4% complete, compared with an average of 13% by now, the Canadian Wheat Board said.

"High humidity and variable crop maturity limited combining over the past week," the board said.

"Scattered showers and light rain, 2-15mm, fell across much of the Prairies last week, causing short-term harvest and field-work delays."

East vs west 

But a warning from Luke Mathews, at Commonwealth Bank of Australia, that dry "Western Australian crop conditions continue to be of worry" were muted by official forecasters later predicting that the country's top grain state had a 60-65% chance of above average rainfall in the spring.

Mr Mathews had raised the prospect of the crop falling to 5m-6m tonnes, from 8.2m tonnes last year, while adding that "great east coast crop conditions are easing some of the pain from a national level".

Chicago wheat for September stood 1.4% lower at $6.92 � a bushel at 07:15 GMT (08:15 UK time), with the better traded December lot losing the same to $7.15 � a bushel.

External markets provided little help, with the dollar continuing its upswing on renewed uncertainties for the global economy, which also sent shares lower, with Tokyo's Nikkei index ending down 1.3%.

The greenback was 0.3% higher against a basket of currencies, making dollar-denominated exports, including many crops, that bit less competitive.

Clamour for corn

And fellow grain corn was no help either, shedding 1.4% to $4.11 � a bushel, as some top growing areas prepare for the start of harvest, which will flood the market with supplies, and, importantly, a surprise rise in the condition of the US crop.

The US Department of Agriculture's weekly crop report showed 70% of corn in "good" or "excellent" condition, a rise of 1 percentage point on the week, and signalling an improvement in yield prospects. The market had expected a fall of 1-2 points,

"Moderate rainfall in the central portion of the belt [appeared] to benefit the crop, along with the heat actually helping some of those that had too much moisture the previous two-to-three weeks," Jon Michalscheck at Benson Quinn Commodities said.

And then there is the technical worry of the huge amount of long positions held by non-commercial investors, which jumped by some 60,000 in a week net of shorts near to a record high, questioning how much buying pressure there is still left out there.

An estimated 5,000 funds got out on Monday.

Condition slide 

The net long situation is less extreme for soybeans, one reason for investors to be less nervous.

Another was that the weekly condition report was more bullish too, with the "good" or "excellent" rating falling by 2 points to 64%, putting the crop significantly below last year's, which was notching up a 69% rating in the same period.

And that might not be the end of the decline.

"Weather for the balance of the month is expected to be the driest of the summer for most of the Midwest," Benson Quinn said.

"Crop stress is expected to expand in the eastern and south eastern areas of the Midwest."

Weak oils

Still, it was difficult for the oilseed to bounce when the vegetable oil complex, to which it contributes through soyoil, was having another poor day, remaining depressed by fears that China, a huge buyer, will release supplies from state reserves and by poor crude prices.

Crude, a big influence on a commodity used to a large extent to make biofuels, was 1.0% lower at $72.36 a barrel.

Kuala Lumpur palm oil was particularly hurt, with the benchmark November lot sliding 1.4% to 2,525 ringgit a tonne.  Palm oil has been viewed as especially ripe for a fall, given historically high prices relative to soyoil.

Back in Chicago, soyoil for September delivery shed 0.2% to 39.17 cents a pound, while soybeans themselves eased 0.5% to $10.02 a bushel for the same month.

The November soybean lot shed 0.5% to $10.01 a bushel.