CBOT corn edges lower as weather worries ease

PARIS/SYDNEY (Reuters) - U.S. corn futures declined further on Friday after falling more than 2 percent in the previous session as weather forecasts eased concerns that frost could cut yields in the U.S. Midwest.

Chicago soybeans also edged down on the fading prospect of frost, after inching higher on Thursday with support from fresh Chinese buying.

Front-month corn and soy remained up 3 and 5 percent respectively over the week after soaring on Tuesday on concerns about a possible freeze in the Midwest.

But forecasts for a major cold spell late next week were scaled back on Thursday, and the more subdued tone on grain markets was further encouraged on Friday by a bounce in the dollar and a broad fall in equities and commodities.

"The concern in the back end of the U.S. forecast that drove corn prices higher has gone away," said Tim Glass, global head of commodities at National Australia Bank Ltd.

He said expectations of ample supplies as the weather outlook improved were keeping prices near 2009 lows, though volatility was increasing as traders bet on the weather.

The U.S. Agriculture Department is currently forecasting the 2009 American corn crop at a near-record of 12.954 billion bushels and a record soybean output of 3.245 billion bushels.

But with the crop developing two to three weeks later than normal, the market has grown nervous about the risk to yields of cold weather during September.

WHEAT EXPORT WORRIES

Chicago Board of Trade corn for December delivery fell 0.53 percent to $3.27-1/4 per bushel by 1123 GMT, while soybeans for November delivery slipped 0.21 percent to $9.51 per bushel.

Soy was underpinned by news of further Chinese imports, with the country the biggest buyer of U.S. soybeans last week, booking 95 percent of total exports, or 463,400 tonnes.

U.S. and European wheat markets remained subdued by mounting supplies and modest exports.

"The wheat balance sheet fundamentally isn't changing," said Glass. "It is only getting gyrated around on the upside by corn and beans so if they continue to head down wheat has got very little chance."

CBOT December wheat inched up 0.05 percent to $4.62 per bushel. On Euronext, November milling wheat was up 0.63 percent at 120.75 euros a tonne in light trade marked by technical adjustments, operators said.

Export worries in the United States were deepened by Thursday's announcement by Brazil that it would test all incoming U.S. wheat shipments for a toxin.

European weekly exports, meanwhile, showed a slowdown in volumes compared to previous weeks, and confirmed that exports in the early part of the season are running behind last year's levels.

Some Euronext operators said the supply glut could push the market lower and toward the European Union's guaranteed minimum price, but others argued there was now scope for a rebound.

(Writing by Gus Trompiz, Editing by Peter Blackburn)