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Wheat drops to three-week low as U.S. rains lift production prospects

By Naveen Thukral

SINGAPORE, May 2 (Reuters) - Chicago wheat futures dropped to a three-week low on Monday, falling for a fourth consecutive session, as rains in key growing parts of the U.S. Plains provided a much-needed relief to the crop.

Corn and soybean prices eased with focus on U.S. planting.

"The trigger for the fall seems to have been the prospect of some much-needed rainfall in very dry Hard Red Winter (HRW) wheat regions," said Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia. "The rainfall up until Sunday morning was not impressive sprinkles in south west Nebraska are not relief. The rainfall though might have accelerated through Sunday. And the rainfall opportunity extends into this week."

The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 1.8% at $10.37 a bushel, as of 0235 GMT, after hitting its lowest since April 8 at $10.34 a bushel earlier in the session.

Corn fell 1.5% to $8.01 a bushel and soybeans lost 1% to $16.68 a bushel.

Good-to-excellent conditions for U.S. winter wheat have fallen to their lowest since 1989, but recent rains have provided relief to crops as they near key phases of development.

Meanwhile, the European Commission cut its forecast for the 2022/23 European Union wheat harvest on Friday, but maintained its projection for record EU exports as war disrupts supply from Ukraine.

In monthly cereal supply and demand estimates, the Commission cut its outlook for usable production of common wheat, or soft wheat, in the July 2022 to June 2023 season to 130.1 million tonnes from 131.3 million tonnes previously.

Ukraine's grain exports have reached 45.709 million tonnes so far in the 2021/22 July-June season, the agriculture ministry said on Friday as it resumed publishing grain export data.

The ministry said the volume included 763,000 tonnes exported in April but gave no comparative figures. Senior agriculture officials said this month that Ukraine exported 300,000 tonnes of grain in March.

Losses in the corn market were limited by concerns over adverse weather in Brazil.

Dry weather in central Brazil is raising concerns about the country's main corn crop, which like the later U.S. harvest is seen as critical to help offset disruption to Ukrainian exports.

In China, authorities plan to approve GMO corn traits developed by Syngenta Group for the first time, the agriculture ministry said on Friday.

Large speculators cut their net long position in CBOT corn futures in the week to April 26, regulatory data released on Friday showed.

The Commodity Futures Trading Commission's weekly commitments of traders report also showed that non-commercial traders, a category that includes hedge funds, trimmed their net short position in CBOT wheat and cut their net long position in soybeans. (Reporting by Naveen Thukral; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)

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