GRAINS-Wheat rebounds on lower-than-expected US crop ratings

CANBERRA, May 28 (Reuters) - Chicago wheat futures rose on Wednesday after U.S. crop condition ratings came in below market expectations, but prices remained under pressure as improving weather conditions in several major producers bolsters the supply outlook.

Corn futures also rose while soybeans edged lower.

The most active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was up 1% at $5.33-1/2 a bushel, as of 0337 GMT.

A short-covering rally lifted wheat from a five-year low of $5.06-1/4 earlier this month, but actual or forecast rain in the U.S. Plains, parts of Europe, the Black Sea region and China have underlined expectations for plentiful supply, with prices plunging 2.6% on Tuesday.

The U.S. Department of Agriculture crop ratings released after market close on Tuesday showed only 45% of U.S. spring wheat in good to excellent condition, below even the lowest in a range of analyst expectations.

The USDA also said 50% of U.S. winter wheat was in good to excellent condition, beneath the average analyst forecast but still the highest rating for this time of year since 2020.

But global wheat demand is low and the risk to crop production will reduce further as northern hemisphere harvests ramp up, said Rod Baker, an analyst at Australian Crop Forecasters in Perth.

"Hefty short positions mean there's still time for a rally," he said. "But each day that goes by it gets less likely."

Commodity funds hold a large net short position in CBOT wheat and were net sellers on Tuesday, traders said.

In other crops, CBOT soybeans Sv1 were down 0.1% at $10.61-3/4 a bushel and corn Cv1 climbed 0.3% to $4.60-3/4 a bushel.

Corn and soybeans are under pressure from expectations of a large corn and soybean crop in Brazil, with agribusiness consultancy Datagro this week increasing its forecasts for the country's 2024/2025 crops.

The USDA rated 68% of the U.S. corn crop as good to excellent in its first condition ratings for the 2025 season, below the average estimate of 73% in a Reuters analyst poll.