CANBERRA, Dec 6 (Reuters) - Chicago wheat futures fell on Wednesday, after confirmation of the second large Chinese purchase of U.S. wheat in two days drove prices to their highest since August in the previous session.
Soybeans inched up as traders monitored weather in top producer Brazil, while corn dipped.
FUNDAMENTALS
* The most-active wheat contract on the Chicago Board of Trade (CBOT) was down 0.5% at $6.28 a bushel by 0124 GMT after reaching $6.36-1/4 on Tuesday, its highest since Aug. 25. Prices have risen 12% since market open on Nov. 28.
* CBOT soybeans rose 0.1% to $13.06-1/4 a bushel and corn fell 0.2% to $4.89-3/4 a bushel.
* The U.S. Department of Agriculture (USDA) confirmed private sales of 198,000 metric tons of U.S. soft red winter wheat to China on Tuesday.
* That followed Monday's USDA announcement that China had purchased 440,000 tons of the grain, the largest one-off U.S. wheat export sale to China since at least 2020.
* The sales buoyed a wheat market in which speculators and funds hold a huge net short position, making it prone to episodes of short-covering that push prices higher.
* Funds were net buyers of CBOT wheat and corn on Tuesday and net sellers of soybeans, traders said.
* This week's U.S. sales to China bring the total since the start of October to 1.15 million metric tons, said StoneX analyst Arlan Suderman.
* "China certainly wouldn't pay a premium to source wheat from the United States, so that's a good sign that domestic futures have finally aligned themselves with world values," Suderman said.
* Outside the United States, the lowest free-on-board offer presented at an Egyptian state purchasing tender for wheat on Tuesday was $250 a metric ton, traders said.
* Meanwhile, soft wheat exports from the European Union since the start of the 2023/24 season in July had reached 12.52 million tons by Dec. 3, down 18% year-on-year, according to EU data.
* Ahead of Friday's monthly USDA supply-and-demand report, analysts surveyed by Reuters on average expected no change to its forecast of 2023/24 U.S. ending stocks and a slight increase to its forecast of world ending stocks.
* Soybean prices have fallen around 7% since mid-November as rain and forecasts for further wet weather in drought-afflicted cropping areas in Brazil bolstered prospects for yields in the world's biggest soy supplier.
MARKETS NEWS
A gauge of global stocks declined for a second straight session and U.S. Treasury yields fell, as investors attempted to assess the policy path of major central banks and the trajectory of slowing economic growth.
(Reporting by Peter Hobson; Editing by Rashmi Aich)
