U.S. grain futures led a broad rally in agricultural markets at Chicago Board of Trade Wednesday.

The threat of stressful weather hindering U.S. crop yield potential coupled with a sharp slide in the U.S. dollar served as drivers to keep investors returning to riskier assets.

Scorching weather in the central U.S. crop belt, along with forecasts for more heat, raised concerns about the size of the U.S. corn crop. Analysts warn that a crop shortfall would cause big problems because supplies are already tight.

A threat to corn's pollination period encouraged traders to rebuild risk premium, as this is the time the crop is most sensitive to hot temperatures that could hurt yields.

This is particularly important this year, when large crops are needed to help satisfy growing global demand in the face of dwindling supplies.

Corn prices are still well off last month's all-time record of $7.99 3/4, but the market has rebounded from a 10% slide following the June 30 acreage and quarterly stocks report from the U.S. Department of Agriculture. A separate USDA report, issued Tuesday, added to the momentum, as the government raised its supply projections less than expected.

A recent pickup in Chinese buying, with the largest one-day sale announced to China since 1995 last week leading traders to believe global demand will continue to rise in the next marketing year that begins Sept. 1.

Meanwhile, helping fuel advances across the commodity sector was a sharp decline in the U.S. dollar.

Comments from Federal Reserve Chairman Ben Bernanke touting the possibility of using additional economic stimulus weakened the dollar and bumped up commodity prices, said Dan Basse, president AgResource Co in Chicago.

This event helped propel not only corn, but all grain and oilseed futures. Prices for most commodity markets were seen as undervalued, opening the door for speculative funds to return to riskier assets, said Mike Zuzolo, president Global Commodity Analytics and Consulting.

CBOT December corn ends up 3.3% cents at $6.79 3/4 a bushel. CBOT September wheat end up 6.3% at $7.14 1/2, KCBT September rose 4% to $7.62 and MGE September climbed 3.5% to $8.20 3/4. CBOT November soybeans end up 1.6% at $13.79 3/4 a bushel.

Other Markets

CBOT December soyoil finished up 2.1% at 58.53 cents/pound, and December soymeal climbed 1.5% to $360.40/short ton.

U.S. rice futures continued to soar Wednesday, ending limit up on a troubled U.S. crop and world prices. A late-planted crop and drought conditions are hurting the U.S. crop, analysts say. The daily limit expands to 75c Thursday. The most-active September contract is up 19% from a June 30 low, closed up 50 cents to $16.69/hundredweight.

Ethanol for December delivery rose 2% to $2.505 per gallon. Oats for September delivery was up 2% at $3.63 a bushel.