GRAINS-Soybeans set for weekly drop on lack of Chinese demand

By Naveen Thukral

SINGAPORE, Aug 29 (Reuters) - Soybeans edged higher on Friday, but the market is on track for its first weekly decline in three weeks as a lack of Chinese demand for U.S. supplies continues to pressure prices.

Corn rose for a second consecutive session on strong demand for U.S. cargoes, while wheat firmed.

"China is continuing to buy most of its soybeans from Brazil and other South American countries," said one oilseed trader in Singapore. "This is going to put pressure on Chicago futures."

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 0.2% at $10.49-3/4 a bushel, as of 0300 GMT. Corn Cv1 gained 0.2% to $4.11 a bushel and wheat Wv1 added 0.1% to $5.29-1/2 a bushel.

For the week, soybeans are down 0.8%, having closed higher in the last two weeks, corn and wheat are largely unchanged for the week.

China's absence from the U.S. soybean market is keeping a lid on prices.

The attention is on talks this week between the two nations. Senior Chinese trade negotiator Li Chenggang is expected to be in Washington this week to meet U.S. officials for trade talks.

Strong U.S. weekly export sales are underpinning corn prices.

Still, U.S. farmers are on track to harvest the nation's biggest corn crop in history this autumn, as well as a bumper soybean crop.

Wheat prices are facing headwinds amid higher production forecasts in major exporting countries and expected rainfall in U.S. winter wheat-growing areas in the coming days, analysts said.

Australia is on track to produce 32 million to 35 million metric tons of wheat in its upcoming harvest, said analysts, who raised their forecasts after an improvement in crop conditions and said they could further upgrade them.