GRAINS-Wheat dips again as short-covering rally loses steam

CANBERRA, May 23 (Reuters) - Chicago wheat futures fell on Friday, slipping for the second straight day, as a short-covering rally that lifted prices from last week's five-year low ran out of steam, but remained on track for a weekly gain.

Corn and soybean futures rose slightly.

The most active wheat contract on the Chicago Board of Trade (CBOT) Wv1 dipped 0.2% to $5.43-1/4 a bushel by 0226 GMT but was up 3.5% from last Friday's close.

CBOT soybeans Sv1 rose 0.1% to $10.68-3/4 a bushel and were 1.7% higher over the week, and corn Cv1 climbed 0.2% to $4.63-3/4 a bushel, gaining 4.5% so far this week.

Wheat bounced back from a low of $5.06-1/4 hit on May 13 as concerns over adverse weather in Russia and China and a decline in U.S. wheat ratings triggered short-covering by speculators, who had bet heavily on price declines.

But traders are not convinced that crops will suffer significant immediate losses and funds switched back to net sellers on Thursday, traders said.

"CBOT wheat was too cheap. Now it's more fairly priced," said Rabobank analyst Vitor Pistoia in Sydney.

However, prices are likely to rise further only if there is a significant and crop-damaging change in weather conditions, he said.

Keeping a floor under wheat prices, however, were better-than-expected weekly U.S. wheat export numbers released on Thursday. Total exports were the biggest for a single week since December 2023.

The International Grains Council (IGC) maintained its 2025-26 wheat crop outlook at 806 million metric tons, with an upward revision for the United States offset by cuts for Iran and Turkey.

The IGC also raised its forecast for 2025-26 global corn production by 3 million metric tons to 1.277 billion tons.

Top wheat exporter Russia has removed a minimum wheat price recommendation until the end of the export season on July 1, sources told Reuters.

The move could reduce Russian export prices but traders said it was unlikely to have a major impact because Russia doesn't have a huge amount of grain to sell and demand from importers is weak.