GRAINS-Wheat drops on improved US crop rating; corn hits six-month low

By Naveen Thukral

SINGAPORE, June 3 (Reuters) - Chicago wheat slid on Tuesday, giving up some of previous session's gains, as improved U.S. crop condition weighed on prices, although intensifying Russia-Ukraine war limited losses.

Corn fell to its lowest level in six months, while soybeans inched higher.

"Any news of improved production prospects are going to be bearish for wheat prices as we get closer to the harvest in northern hemisphere," said a Singapore-based grains trader.

The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 fell 0.7% to $5.35-1/4 a bushel, as of 0415 GMT.

Corn Cv1 lost 0.6% to $4.35-1/2 a bushel, trading close to its lowest level since early December hit earlier in the session. Soybeans Sv1 rose 0.2% to $10.35-1/4 a bushel.

The U.S. Department of Agriculture's (USDA) weekly crop progress report showed on Monday 50% of U.S. spring wheat and 52% of winter wheat in good to excellent condition, exceeding analyst expectations.

The U.S. winter wheat crop has been plagued by persistent dryness, but recent rains have helped the crop rebound. The USDA ratings surpassed analyst predictions of a 50% good to excellent rating for the winter wheat crop and a 47% rating for spring wheat.

Wheat prices rose on Monday on short covering as a Ukrainian drone attack in Russia shifted attention back on the war between the two grain exporters.

Australia's wheat production is projected to drop 10% this year to 30.6 million metric tons due to dry conditions across several cropping regions. Nevertheless, production is expected to remain well above the 10-year average, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a quarterly crop report.

The pressure on the soybean market stemmed from trade tensions with China, the world's biggest soybean buyer, after President Donald Trump on Friday accused China of violating an agreement with the U.S. to mutually roll back tariffs.

Trump and Chinese leader Xi Jinping will likely speak this week, the White House said on Monday.

Ample Brazilian soy supplies continue to pressure the market. Agribusiness consultancy AgRural raised its forecast for Brazil's 2024/25 soybean crop by 1.3 million tons to 169 million tons, citing improved yields.

The USDA rated 67% of U.S. soybeans in good to excellent condition in its initial ratings of the 2025 soy crop, just below an average of analyst estimates for 68% but roughly on par with previous years. Soybean planting was 84% complete, ahead of the five-year average of 80%.

The agency's corn rating improved to 69% good-to-excellent, up a percentage point from last week and in line with trade expectations. Planting was 93% complete, matching the five-year average.

Commodity funds were net sellers of CBOT corn, soybean, soyoil and soymeal futures contracts on Monday and net buyers of wheat futures, traders said. COMFUND/CBT