Wheat, corn and soy slip after rally but all head for weekly gains
Adds analyst comment, updates prices
CANBERRA, Sept 6 (Reuters) -Chicago wheat, corn and soybean futures eased on Friday as traders decided that a fortnight-long rally which lifted prices from near four-year lows has left the contracts over-valued amid plentiful supply.
All three crops were nevertheless on track for weekly gains.
The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was down 0.6% at $5.71-1/4 a bushel by 0326 GMT but up 3.6% for the week, its second straight weekly increase.
CBOT corn Cv1 slipped 0.2% to $4.09-3/4 a bushel but was up 2.2% from last Friday's close, also its second weekly gain in a row, while soybeans Sv1 fell 0.3% to $10.20-3/4 a bushel but were up 2.1% over the week for a third consecutive weekly rise.
The rallies were driven by speculators unwinding some of their hefty short positions. Nudging the markets towards higher prices were a weak dollar USD= that stimulated U.S. export demand and poor wheat production in Western Europe.
That tide turned on Thursday, however, with commodity funds deciding that the contracts had become over-valued and turning net sellers of CBOT corn, wheat and soybeans, according to traders.
Cheap wheat continues to flow from the Black Sea region, pressuring prices, and the U.S. will shortly begin harvesting what are - despite a dry end to the growing season - predicted to be huge corn and soy crops, creating a flood of new supply.
Many traders are waiting for the U.S. Department of Agriculture to release its September crop estimates next week before making big moves.
Brokers StoneX this week lowered their U.S. corn production estimate to 15.127 billion bushels from 15.207 billion and raised its estimate for U.S. soybean output to 4.575 billion bushels from 4.483 billion.
On wheat, which has risen furthest of the three crops, there has not been enough new information to adjust supply expectations and sustain a rally, said Andrew Whitelaw at agricultural consultants Episode 3 in Canberra.
"We wouldn't be surprised if this move upwards was somewhat of a 'dead cat bounce' and we start to see some slippage in the coming days," he said.
Reporting by Peter Hobson; Editing by Rashmi Aich
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