GRAINS-Chicago wheat futures dip as short-covering rally fades

By P.J. Huffstutter

CHICAGO, May 22 (Reuters) - Chicago wheat futures fell on Thursday as a short-covering rally that took prices to a one-month peak petered out, with traders seeing limited threats to Northern Hemisphere crops despite adverse weather concerns.

Corn futures were mixed after three-day gains, with a steadier U.S. dollar, weaker crude oil and generally favorable crop conditions curbing deferred contract months.

Soybeans ticked up on technical trading, even as soyoil futures slumped as an amendment to the U.S. House of Representatives' tax bill was seen as negative for biodiesel tax credits, analysts said.

The Chicago Board of Trade (CBOT) most-active soybean contract Sv1 was up 0.38% at $10.66-3/4 a bushel at 1656 GMT, while corn Cv1 firmed 0.22% to $4.62 a bushel.

CBOT wheat Wv1 eased 0.68% to $5.45-1/2 a bushel, moving back from Wednesday's one-month high of $5.56-1/4.

Ahead of the Memorial Day holiday weekend, traders focused on adjusting their positions and feeling a little hesitant about the size of this summer's domestic wheat harvest, said Don Roose, president of Iowa-based U.S. Commodities.

"Yes, there are disease issues, yes there are flooding issues," Roose said. "But it's still looking like we're going to have a big crop."

After dropping to a near five-year low of $5.06-1/4 on May 13, concerns over adverse weather in Russia and China and an unexpected decline in U.S. wheat ratings triggered a wave of short-covering in the past week.

Traders are now questioning whether Chinese or Russian wheat crops have suffered significant damage, while the U.S. remains on track for a large harvest despite disease risks in some areas, analysts said.

Better-than-expected weekly U.S. wheat export news also helped keep a floor under futures prices, market analysts said.

On Thursday, the U.S. Department of Agriculture reported that total wheat exports - a combination of old- and new-crop wheat - was 868,829 metric tons last week, marking the biggest for a single week since December 2023.