Wheat drops to 2-1/2-year low on improved U.S. winter crop, weak exports

SINGAPORE, May 31 (Reuters) - Chicago wheat slid to its lowest levels in two-and-a-half years on Wednesday, with the market declining for an eighth consecutive month, as beneficial rains in the U.S. grain belt and dismal export demand weighed on prices.

Corn edged lower while soybeans were largely unchanged.

FUNDAMENTALS

The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.9% at $5.85-3/4 a bushel, as of 0058 GMT, after dropping earlier in the session to its weakest since Dec. 2020 at 5.85 a bushel. Corn fell 0.3% to $5.92-1/2 a bushel and soybeans added quarter of a cent to $12.96-3/4 a bushel.

* The condition of the drought-hit U.S. winter wheat crop has improved more than analysts expected.

* The U.S. government in a weekly crop progress report on Tuesday rated 34% of winter wheat in "good-to-excellent' condition, as of Sunday, up 3 percentage points from last week following rains in the southern Plains. Analysts on average had expected the rating to rise to 32%, according to a Reuters survey.

* For May, wheat is down 7.7%, falling for an eighth month in a row, corn has risen 1.2% after closing sharply lower in April and soybean are down 8.7%, a second month of losses.

* Wheat is facing additional pressure from weak export demand for U.S. supplies. Export prices of Russian wheat are softening further in anticipation of a new harvest and amid low demand from global importers, analysts said.

* Buyers in the United States are believed to have last week purchased about 60,000 tonnes of European Union origin wheat expected to be sourced about half each from Poland and Germany, European traders said, underscoring high prices for domestic U.S. wheat.

* The European Commission has increased its monthly forecasts for this year's European Union soft wheat and rapeseed harvests, while lowering its outlook for barley and maize, data posted by the EU's executive showed.

* Ukraine is seeking guarantees from Moscow and the U.N. that a deal on the safe export of Black Sea grain will work normally if Kyiv allows Russian ammonia to transit Ukrainian territory, a Ukrainian official said on Tuesday.

* Meanwhile, planting of the U.S. 2023 corn and soybean crops is advancing ahead of the normal pace while producers and traders monitor dry conditions in portions of the Midwest.

* After the CBOT close, the U.S. Department of Agriculture's (USDA) first corn condition ratings for 2023 pegged 69% of the U.S. crop in "good-to-excellent" condition, below an average of analyst expectations for 71% and down from 73% a year ago.

* U.S. corn planting is 92% complete, ahead of the five-year average of 84%, and soybean planting is 83% complete, ahead of its five-year average of 65%, the USDA said.

* The government has projected supplies of corn and soybeans will rise in the 2023/24 marketing year due to forecasts for record harvests.

* Commodity funds were net sellers of CBOT soybean, soyoil, wheat, corn and soymeal futures contracts on Tuesday, traders said.

MARKET NEWS

* European stocks and the U.S. dollar fell, after climbing to a two-month high, on Tuesday as relief that the U.S. government had averted a possible default gave way to concern that the deal could face a rocky path through Congress.

DATA/EVENTS (GMT) 0130 China NBS Manufacturing PMI May 0645 France GDP QQ Final Q1 0645 France CPI (EU Norm) Prelim YY May 0645 France Producer Prices YY April 0755 Germany Unemployment Chg, Rate SA May 0800 ECB releases biannual Financial Stability Review 1200 Germany CPI, HICP Prelim YY May 1800 US Federal Reserve issues the Beige Book (Reporting by Naveen Thukral; Editing by Sherry Jacob-Phillips)