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GRAINS-Soybeans set for biggest weekly rise in 3 mths as U.S. cuts crop forecast

forecast@

* Soybeans up 2.2 pct this week, biggest gain since early July

* Market surprised by reduction in U.S. yield estimate

* Wheat faces 3rd week of losses, USDA raises supply estimate

(Adds details, quotes) SINGAPORE, Oct 13 (Reuters) - Chicago soybean futures edged higher on Friday, with the market poised for the biggest weekly gain in more than three months after the U.S. government unexpectedly cut its production forecast. Wheat is on track for a third week of decline as the U.S. Department of Agriculture lifted its estimate for global supplies, while corn rose for a second session, tracking gains in soybeans. The Chicago Board Of Trade most-active soybean contract is up 2.2 percent this week, the biggest weekly gain since early July. Wheat is down 2.8 percent for the week, the biggest weekly loss since Aug. 11 and falling for a third week. Corn is little changed for the week, after losing ground last week. The USDA cut its U.S. soybean yield estimate to 49.5 bushels per acre (bpa), down from 49.9 bpa in September and below all but one estimate in a Reuters poll. In addition, dryness in Brazil is supporting the soybean market. "Brazil's dry soybean regions, Mato Grosso in particular, look unlikely to get enough rain to broadly raise soil moisture for another week or so," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia. "The end of October is also now coming into the forecast horizon." The agency raised its U.S. corn yield estimate to 171.8 bpa, above even the highest in a range of trade estimates.

Still, an unusually slow start to U.S. corn and soybean harvests has raised questions about the accuracy of the government's production forecasts and some traders made big bets the crop size will be substantially smaller when all fields are cut. For wheat, the agency raised its U.S. and global 2017/18 wheat ending stocks forecasts. It lifted the forecast for world inventories at the end of the crop in June 2018 to 268.13 million tonnes from 263.14 million tonnes estimated last month. Commodity funds were net buyers of CBOT soybean, corn, soymeal and soyoil futures contracts on Thursday and net sellers of wheat, traders said. Trade estimates of net fund buying in soybeans ranged from 18,000 to 25,000 contracts and in corn from 9,000 to 15,000 contracts.

Grains prices at 0241 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 431.25 0.75 +0.17% -0.46% 443.68 32 CBOT corn 350.00 1.00 +0.29% +1.16% 352.33 52 CBOT soy 994.00 2.00 +0.20% +2.98% 967.23 75 CBOT rice 12.23 -$0.02 -0.16% +1.62% $12.39 65 WTI crude 50.89 $0.29 +0.57% -0.80% $50.06 53

Currencies

Euro/dlr $1.185 $0.002 +0.16% -0.08% USD/AUD 0.7839 0.002 +0.26% +0.67%

Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential

(Reporting by Naveen Thukral; Editing by Biju Dwarakanath)