NAPERVILLE, Illinois, Aug 3 (Reuters) - August is the least likely month of the U.S. growing season to feature a rally in Chicago-traded soybeans, and weather forecasts through mid-month seem to favor that trend in 2023.

But new-crop export demand has started to pick up and, despite expectations for supportive weather, U.S. soybean production is far from settled given this season’s hardships.

CBOT November soybeans are amid their biggest downturn since May, having tumbled nearly 7% since marking their highest price of the year so far on July 24.

Grains have performed significantly worse over that period with December corn and CBOT September wheat down 13% and 17%, respectively.

That has lifted soybeans’ price advantage versus corn to the highest August levels in three years. As of July 25, speculators held their most bullish late-July soybean view in seven years, but they were just slightly bullish corn, perhaps begrudgingly.

In the last decade, November soybeans strengthened throughout August only twice - in 2020 and 2013. Perhaps not coincidentally, those were by far the decade’s driest Augusts in the heart of the Midwest, specifically in Iowa and Illinois.

That scenario is not on the horizon for now as weather outlooks suggest a normal to wet bias with no heat across most of the Corn Belt for the next couple weeks.

Another August headwind for soybean prices is the market bias on U.S. yields. The U.S. Department of Agriculture’s August yield has landed below the average trade guess just three times in the last decade (2021, 2014, 2013), and those margins have been smaller than in years where the agency's yield surprises to the high side.

Reuters plans to publish polls on Monday for next Friday’s set of USDA reports.

U.S. soybean acres came in well below trade expectations on June 30 and some analysts thought that number could eventually come up, but that adjustment is not on the table until next month’s crop production report.

U.S. soybean export demand for 2023-24 has recently been lackluster, but U.S. beans are now cheaper than Brazilian ones for shipment to China in the later months of 2023, which should support further U.S. sales.

USDA data on Thursday morning showed new-crop U.S. soybean export sales in the week ended July 27 totaled 2.63 million tonnes, the largest for any week in July since 2020 and well above average for the time of year in general. China and unknown destinations accounted for 92%.

At least four more cargoes to China have been confirmed since then through USDA’s daily sales, though last week’s volumes to both China and unknown came in above what was flashed. Karen Braun is a market analyst for Reuters. Views expressed above are her own.

(Writing by Karen Braun Editing by Matthew Lewis)