Nov. 4 (Bloomberg) -- Soybeans dropped for the first time in three days on speculation their rally to a one-week high may reduce demand for U.S. supplies. Corn was little changed and wheat climbed.

The oilseed rose 3.5 percent in the previous two days and Corn gained 6.6 percent after wet, freezing weather delayed Midwest harvests last month and may curb production in the U.S., the largest grower and exporter of both crops. The U.S. Department of Agriculture will update its forecasts on Nov. 10.

Prices are down on “position-squaring before the USDA releases its monthly crop forecasts,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co. The USDA may lower its production estimates, while the market will focus on the department’s demand forecast, he said.

Soybeans for January delivery declined as much as 0.7 percent to $10.0375 a bushel in electronic trading on the Chicago Board of Trade and were at $10.08 as of 2:53 p.m. Tokyo time. The contract reached $10.21 yesterday, the highest level since Oct. 26.

Corn for December delivery was unchanged at $3.90 a bushel after losing as much as 0.7 percent to $3.8725 earlier. The price touched yesterday $3.965, the highest price for the most- active contract since Oct. 26.

The Linn Group, a Chicago-based commodity researcher and brokerage, yesterday cut its U.S. production estimates, citing the harvest delays.

The U.S. corn crop will total 13.025 billion bushels, down from the 13.244 billion forecast on Oct. 7, Linn Group said yesterday in a client report. The government forecast a crop of 13.018 billion bushels on Oct. 9, up from last year’s 12.101 billion bushel harvest.

Soybean Forecast

The soybean crop will reach 3.325 billion bushels, less than the Oct. 7 forecast of 3.411 billion, the Linn Group said. Last month, the USDA predicted a record 3.25 billion bushels, up from 2.967 billion collected in 2008.

The U.S. soybean crop was 51 percent harvested by Nov. 1, compared with a five-year average of 87 percent, according to the Department of Agriculture. The corn harvest was 25 percent complete, compared with an average 71 percent. Crops are being collected at the slowest pace since before 1986, when the USDA began tracking seasonal progress.

Wheat for December delivery in Chicago rose 0.5 percent to $5.1825 a bushel at 2:50 p.m. Tokyo time. The price is down 15 percent this year, partly because of decreased demand for U.S. grain and increased global production.

Australia’s New South Wales, usually the nation’s second- biggest grain producer, may harvest a smaller crop this year than previously forecast because of dry weather and frost, the state government said.

Output of all winter grains may be less than 6.6 million metric tons, down from the 8 million tons predicted in mid- September, Ian Macdonald, state minister for primary industries, said today. Wheat production may drop to less than 4.5 million tons, he said.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

Last Updated: November 4, 2009 01:30 EST