* USDA raises U.S. corn yield estimate to 169.9 bpa
* USDA ups soy yield to 49.9 bpa, topping expectations
* Wheat turns higher after early declines
(Updates with closing CBOT prices) CHICAGO, Sept 12 (Reuters) - Chicago corn futures fell 1.7 percent on Tuesday, the biggest drop for a most-active contract in nearly a month, after the U.S. Department of Agriculture raised its 2017 corn yield forecast, bucking most trade expectations for a reduction. Soybean futures fell after the USDA surprised analysts by hiking its U.S. soybean yield estimate as well. Wheat futures closed higher, rallying from early declines and gaining against corn on inter-market spreads. Chicago Board of Trade December corn settled down 6 cents at $3.51-1/2 per bushel after dipping to $3.45-1/2, its lowest since Aug. 31. CBOT November soybeans ended down 9-1/2 cents at $9.50-1/2 per bushel while December wheat rose 7-1/4 cents to $4.42 a bushel. Corn fell after the USDA in a monthly report raised its estimate of the average U.S. 2017 corn yield to 169.9 bushels per acre (bpa) from its August estimate of 169.5 bpa and above an average of analyst expectations for 168.2 bpa. "Two months in a row, the government throws a bearish surprise at the trade. There's nothing bullish about these numbers: yields are bigger than the trade thought," said Don Roose, president of Iowa-based U.S. Commodities. USDA raised its soybean yield estimate to 49.9 bpa, from 49.4 in August, topping a range of trade expectations.
"Soybeans got to enjoy some beneficial weather in the Corn Belt in August, and yield was increased as a result. This bump is not unexpected, but the 0.5 additional bushels per acre keeps the balance sheet's ending stocks at 475 million bushels, even with greater export demand," said Alex Norton, analyst at Beeson Inc. The increases came in spite of dry conditions in portions of the Midwest crop belt. "The U.S. yields show us just how resilient crops are these days to weather-related stress events. Technology has improved over the past five years," said Terry Reilly, senior commodity analyst with Futures International. CBOT wheat firmed on long wheat/short corn spreads, with the December wheat contract climbing to the day's high late in the trading session. Also supportive, the USDA trimmed its world wheat ending stocks forecast for 2017/18 to 263.14 million tonnes, from 264.69 million in August.
CBOT settlement prices:
Net Pct Volume
Last change change
CBOT wheat WZ7 442.00 7.25 1.7 90811 CBOT corn CZ7 351.50 -6.00 -1.7 261184 CBOT soybeans SX7 950.50 -9.50 -1.0 164290 CBOT soymeal SMZ7 300.00 -3.60 -1.2 63574 CBOT soyoil BOZ7 35.19 0.04 0.1 75938
NOTE: CBOT September wheat, December corn and November soybeans shown in cents per bushel, December soymeal in dollars per short ton and December soyoil in cents per lb.
(Additional reporting by Tom Polansek in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Lisa Shumaker and Richard Chang)