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GRAINS-Soybeans edge higher, set for weekly gain of nearly 3%

SYDNEY, July 12 (Reuters) - U.S. soybean futures edged higher on Friday, with the oilseed poised to record a weekly gain of nearly 3% after the U.S. Department of Agriculture said production would be below market forecasts.

FUNDAMENTALS

* The most active soybean futures contract on the Chicago Board Of Trade is up nearly 3% for the week, the biggest weekly rally in a month.

* The most active corn futures were steady, but up more than 1% for the week, gaining for a second week.

* The most active wheat futures eased slightly but are up 1% for the week, the first weekly gain in a month.

* The USDA lowered its U.S. 2019-20 soybean production estimate to 3.845 billion bushels, down from 4.150 billion in June. The USDA cut its soybean yield estimate to 48.5 bushels per acre, from 49.5 in June, a slightly below market estimates.

* The USDA in its July supply/demand report lowered its forecast of 2019/20 wheat production in Russia, the European Union, Australia and Canada.

* The USDA lowered its forecast of 2019/20 global wheat ending stocks to 286.46 million tonnes, down from 294.34 million in June and near the low end of a range of analyst expectations.

* The USDA also trimmed its forecast of U.S. 2019/20 wheat ending stocks to 1.0 billion bushels, lower than most analysts had expected, although its estimate of U.S. all-wheat production was 1.921 billion bushels, above an average of trade expectations.

* For corn, the USDA raised its production forecast to 13.875 billion bushels, based on its larger-than-expected June 28 planted acreage estimate of 91.7 million acres.

* The government left its estimate of the U.S. corn yield unchanged at 166.0 bushels per acre, while most analysts in a Reuters survey had expected a slight reduction.

MARKET NEWS

* The dollar was steady on Friday, having regained some traction against its peers after stronger-than-expected U.S. inflation data tempered the prospect of an aggressive Federal Reserve interest rate cut later this month.

* Oil prices fell on Thursday as OPEC forecast slower demand for its crude next year, with crude futures easing from their highest in more than a month after U.S. producers cut about half of their output in the Gulf of Mexico ahead of what could be one of the first major storms of the Atlantic hurricane.

* The Dow and S&P 500 rose on Thursday to close at record highs as health insurers gained after the Trump administration scrapped a plan designed to rein in prescription drug prices, while financial shares climbed with bond yields.

Grains prices at 0037 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSICBOT wheat 520.75 -0.75 -0.14% +3.17% 522.88 60CBOT corn 448.00 0.00 +0.00% +1.93% 441.43 64CBOT soy 919.25 2.00 +0.22% +0.71% 910.02 57CBOT rice 11.90 -$0.03 -0.25% -0.21% $11.78 69WTI crude 60.48 $0.28 +0.47% +0.08% $55.81 69

Currencies

Euro/dlr $1.125 $0.000 -0.01% +0.02%USD/AUD 0.6978 0.001 +0.07% +0.30%

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

(Reporting by Colin Packham; editing by Richard Pullin)