GRAINS-Wheat rally hits the buffers as US dollar stabilises

CANBERRA, May 22 (Reuters) - A rally in Chicago wheat futures hit the buffers on Thursday, with prices falling from Wednesday's one-month high as the U.S. dollar halted its decline and a Russian consultancy raised its production forecast for the country.

Corn and soybean futures also fell.

FUNDAMENTALS

* The most active wheat contract on the Chicago Board of Trade (CBOT) Wv1 fell 0.7% to $5.45-1/2 a bushel at 0154 GMT, with CBOT soybeans Sv1 falling 0.9% to $10.53-1/4 a bushel and corn Cv1 easing 0.5% to $4.58-3/4 a bushel.

* CBOT wheat slumped to a five-year low of $5.06-1/4 a bushel on May 13, hurt by ample supply and lacklustre demand from importers.

* But a weakening dollar, concerns over adverse weather in Russia and China and an unexpected decline in U.S. wheat ratings triggered a wave of short-covering that drove prices as high as $5.56-1/4 on Wednesday.

* A weaker U.S. dollar makes U.S. farm goods more attractive to overseas buyers. The greenback was flat on Thursday. .DXY USD/

* That said, traders are not convinced that Chinese or Russian wheat crops have suffered significant damage and the U.S. remains on track for a large harvest.

* Consultant Sovecon raised its 2025 Russian wheat production forecast to 81 million metric tons from 79.8 million tons, but warned persistent dryness in many regions could cause crop losses.

* "We don't really have a fundamental story to justify sustaining a rally," StoneX analyst Arlan Suderman said.

* "But we do have enough potential stories to make end users and fund managers holding large short positions nervous at current price levels," he added.

* Commodity funds have been net buyers in six of the last seven sessions, traders say. However, they remained net short overall.

* In other crops, Brazil's 2024/25 second corn harvest is estimated at a record 112.9 million metric tons, up 10.5% from the previous season, consultants Agroconsult said.

* Dry weather conditions in the coming days will help air out Argentina's muddy fields, the Buenos Aires Grains Exchange said, after heavy storms flooded the already behind-schedule soybean crop.

MARKETS NEWS

* Major stock indexes and the dollar fell on Wednesday as investors worried about a deteriorating U.S. fiscal outlook and Treasury yields climbed following a poorly received sale of 20-year U.S. bonds. MKTS/GLOB