Wheat hits 10-month high on expectations of lower Russian supply

CANBERRA, May 22 (Reuters) - Chicago wheat futures rose on Wednesday to their highest since July as adverse weather led to further downgrades of harvest estimates in Russia, the biggest exporter, fuelling a rally that has pushed prices up 17% this month.

Also helping wheat were concerns of crop damage spreading to Ukraine, another major global supplier, and a decline in crop condition ratings in the United States.

Corn futures rose slightly and soybeans were flat.

FUNDAMENTALS

* The most-active wheat contract on the Chicago Board of Trade (CBOT) was up 1% at $7.04-1/2 a bushel at 0054 GMT after rising as high as $7.07-1/2.

* CBOT soybeans were barely changed at $12.36-3/4 a bushel and corn was 0.4% higher at $4.59-3/4 a bushel.

* All three contracts hit their lowest levels since 2020 earlier this year but have rebounded as supply outlooks tightened.

* Soybeans are up around 10% from this year's lows, corn is up 13% and wheat has gained nearly 35%.

* Russia's IKAR agricultural consultancy cut its forecast for the country's wheat harvest to 83.5 million metric tons from 86 million tons and its projection for Russian wheat exports to 45 million tons from 47 million tons.

* The downgrade is the third this month. Most forecasters predicted a harvest of well above 90 million tons before crops were hit by dry weather and bitter frosts.

* Russia's new agriculture minister, Oksana Lut, said last week that 900,000 hectares of frost-hit crops would need to be replanted.

* In Ukraine, a state weather forecaster said frosts had not significantly damaged crops but traders are on edge after consultants APK-Inform on Monday warned of yield losses.

* "Russia and Ukraine are expected to account for 33% of world wheat exports in the current marketing year. These two countries essentially set the world cash wheat price," StoneX analyst Arlan Suderman wrote in a note.

* Meanwhile, the U.S. Department of Agriculture (USDA) lowered its U.S. winter wheat crop condition rating to 49% good to excellent from 50% in a weekly crop progress report on Monday.

* The rating came in 2% below analysts' expectations but is still the best for this time of year since 2020.

* Commodity funds were net buyers of CBOT wheat on Tuesday but net sellers of soybeans and corn, traders said.

* Chinese importers are believed to have purchased at least two shipments of soybeans from the United States in the past few days, grain traders said.

* The USDA said 70% of the U.S. corn crop and 52% of the soybean crop was planted as of Sunday, more than analysts had expected.

MARKETS NEWS

* Wall Street ended modestly higher and U.S. Treasury yields dipped on Tuesday amid the doldrums ahead of a holiday weekend and a lack of substantial market catalysts. (Reporting by Peter Hobson; Editing by Mrigank Dhaniwala)