October 15, 2018 / 4:15 AM / 9 months ago

GRAINS-Corn drops after strong gains, ample supply drags on prices

* Corn eases after climbing to highest since Aug. 21

* Abundant supplies of corn, soybeans limit gains

* Wheat prices supported by lower output in Russia, Australia (Adds comment, detail)

By Naveen Thukral

Oct 15 (Reuters) - Chicago corn futures lost ground on Monday as the market took a breather following two sessions of strong gains that were triggered by a forecast of lower U.S. production.

Wheat eased slightly after climbing 1.8 percent on Friday, with prices supported by weaker production in Russia and Australia.

The Chicago Board of Trade most-active corn contract had dropped 0.4 percent to $3.72-1/4 a bushel by 0354 GMT, while soybeans gave up 0.2 percent to $8.64 a bushel.

The corn market on Friday climbed to its highest since Aug. 21 at $3.74 a bushel.

Wheat on Monday dipped 0.1 percent to $5.16-3/4 a bushel.

“Soybeans and corn are easing after strong gains that we saw at the end of last week,” said Phin Ziebell, agribusiness economist at National Australia Bank.

“The USDA has cut its estimates for corn and soybean crops, but both crops are expected to still be pretty large which will keep a lid on prices.”

The U.S. Department of Agriculture surprisingly trimmed its forecasts for both domestic corn and soybean production on Thursday, with the soy cut stemming from a reduction in acres while the corn harvest will be lower due to smaller-than-expected yields.

The corn crop was seen at 14.778 billion bushels, based on an average record yield of 180.7 bushels per acre, the government said in its monthly supply and demand report. Soybean production was pegged at 4.690 billion bushels, with yields averaging a record 53.1 bushels per acre.

There was additional support for corn and soybeans stemming from delays in the harvest in the United States.

Drier Midwest weather is expected in the second-half of October, but heavy rains last week may have damaged some crops.

Strategie Grains analysts sharply increased their estimate of this year’s maize harvest in the European Union on Friday as bumper yields in southeast Europe were seen offsetting a drought-hit crop further west.

In the soybean market, the focus is on the Washington-Beijing trade war which has curbed U.S. bean exports to top importer China.

China bought 8.01 million tonnes of soybeans in September, down from 9.15 million tonnes in August and below the 8.11 million tonnes in September 2017, according to Reuters calculations based on Chinese customs data.

The wheat market is being underpinned by tightening world supplies after the USDA cut forecasts for Russian and Australian crops on Thursday.

Large speculators trimmed their net short position in CBOT corn futures in the week to Oct. 9, regulatory data released on Friday showed.

The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and increased their net short position in soybeans. (Reporting by Naveen Thukral; Editing by Richard Pullin and Joseph Radford)

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