GRAINS-Corn retreats ahead of USDA report next week, soybeans slide

By Karl Plume

CHICAGO, Sept 5 (Reuters) - U.S. corn futures retreated from a 6-1/2-week high on Friday as early short-covering support faded and traders squared positions ahead of next week's monthly U.S. government crop supply and demand report, and as farmers prepared to harvest a record crop.

Wheat also eased after posting early gains, while soybeans resumed their downward drift as the market focused on a lack of U.S. soy purchases by top importer China.

"We made kind of a high on the up move going into the weekend and that opened the door for some liquidation on corn and beans," said Matthew Wiegand, a broker with FuturesOne.

Corn traded higher for most of the session after a weekly export sales report showed continued strong demand and as investors squared positions ahead of next Friday's monthly USDA supply and demand report. Traders are gauging the size of the U.S. harvest after some reports of disease pressure and dry late-season weather in parts of the Midwest.

S&P Global Commodity Insights on Friday forecast U.S. corn and soybean production above USDA's August outlook, while other private forecasts this week, including from Allendale and StoneX, have projected yields and production below the government's view.

The USDA on Friday reported another week of strong U.S. corn export sales, with old- and new-crop sales commitments well ahead of last year. Soybean export sales, however, fell to a one-month low, with no confirmed sales to China.

Chicago Board of Trade December corn CZ25 ended 1-3/4 cents lower at $4.18 per bushel, after hitting the highest level since July 22 during the session. The contract was down 0.5% for the week.

November soybeans SX25 were down 3 cents at $10.30 per bushel, for a 2.6% weekly decline. December wheat WZ25 ended down 1/4 cent at $5.19-1/4 a bushel, down 2.8% on the week.