CANBERRA, Dec 1 (Reuters) - Chicago wheat futures dipped on Friday, but were still on track to end the week 3% higher after larger-than-expected U.S. export sales added impetus to a short-covering rally.
Soybeans and corn also slipped and were flat over the week.
The U.S. Department of Agriculture (USDA) reported export sales of 2023/24 wheat in the week ended Nov. 23 of 22,800 metric tons, a six-week high. The USDA said China had bought a net 197,310 tons, also the most in six weeks.
Speculators had built a large short positions in Chicago wheat, adding extra pressure on the market as plentiful supply of cheap Russian grain held prices around three-year lows.
But commodity funds were net buyers of wheat futures on Tuesday, Wednesday and Thursday, traders said, driving a price rally.
The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.5% at $5.94-3/4 a bushel by 0421 GMT, but set for its biggest weekly gain since early October.
Analysts at JPMorgan said they had a "prominent bullish risk bias and constructive price forecast" for wheat.
"The world balance continues to show a sustained trend of declining inventories and stocks-to-use through 2023/24 to 2024/25, to their lowest since 2013/14," they said, predicting that prices would average $6.33 a bushel next year.
Russia expects another bumper harvest next year. Consultants IKAR said the country would produce more wheat, but export less next year than previously thought.
Meanwhile, the Buenos Aires Grains Exchange said Argentina's 2023/24 wheat harvest could be larger than currently expected, as late frost may have done less damage than forecast.
In other crops, CBOT soybeans fell 0.8% to $13.32-1/4 a bushel and corn slipped 0.2% to $4.81-3/4 a bushel.
Consultancy Patria Agronegocios said Brazil would produce 150.67 million tons in the 2023/24 cycle, below last season's 154.10 million, due to drought in key producing states.
The projection is the first seen by Reuters that predicts a year-on-year decline in soy production in Brazil, the world's biggest soybean exporter.
Soybean demand is also strong in the United States, where the bean crush likely jumped to a record 6.033 million short tons in October, a poll of analysts showed ahead of a monthly USDA report.
The USDA reported U.S. soybean export sales of last week at 1,895,300 metric tons, above expectations, and private sales of 134,000 metric tons for delivery to China.
In corn markets, Patria said Brazil would likely produce 82.45 million tons of second corn in 2023/24, down around 18 million tons from last season.
Second corn planted after soybeans are harvested represents around 75% of Brazil's total corn output.
U.S. export sales of U.S. corn in the week ended Nov. 23 at 1,927,800 metric tons also exceeded expectations.
(Reporting by Peter Hobson; Editing by Rashmi Aich and Sherry Jacob-Phillips)