U.S. corn and wheat futures fell on Friday and soybeans trimmed gains after reaching a six-week high as forecasts showed dry areas of major exporter Argentina are in line to receive favourable rains.

Northern crop areas of the world’s No. 2 corn exporter and third largest soybean supplier are set to receive more rain than previously expected during the weekend, said Andy Karst, meteorologist for World Weather Inc. The rain "would be notable if it happened" after weeks of recent dryness, he said.

The markets retreated on the outlook after rising in earlier trading on worries about lighter-than-expected rains that fell on Thursday.

Traders are focusing on the weather because farmers in South America need to produce large crops to meet strong demand from top soybean importer China and compensate for a drought-reduced U.S. harvest last year.

Traders broadly expect large harvests in South America in the coming months, but every twist in the weather is being scrutinized amid tight global supplies.

Conditions look "a little bit wetter in the northern fringe of the corn and soybean belt," said Jim Gerlach, president of A/C Trading.

Chicago Board of Trade (CBOT) March corn dipped 0.6 per cent to $7.36 a bushel, while March wheat slid 1.8 per cent to $7.65 a bushel. March soybeans ended up 0.4 per cent at $14.74-1/4 a bushel after touching a six-week high of $14.86-1/2 a bushel earlier in the session (all figures US$).

Argentina vs. Brazil

With traders focused on South America, Informa Economics, a closely watched crop forecaster, cut its estimate for Argentina’s soybean harvest by 6.7 per cent to 54.5 million tonnes and its estimate for the corn harvest by 7.4 per cent to 25 million tonnes.

However, the firm increased its estimate for Brazil’s soybean harvest 6.2 per cent to 70.3 million and its outlook for Brazil’s corn harvest 1.3 per cent, to 84 million.

The U.S. Department of Agriculture last pegged Argentina’s soybean crop at 54 million tonnes and the corn crop at 28 million tonnes. The department estimated Brazil’s soybean crop at 82.5 million and its corn crop at 71 million.

USDA will update its crop forecasts next Friday in a monthly global supply and demand report.

Wheat sinks

Wheat prices tumbled on technical selling, with the March contract pulling back after failing to break above Thursday’s high, traders said.

Following the decline in prices, Egypt’s main wheat-buying agency issued a tender to buy wheat from global suppliers for shipment March 1-10. The results are expected on Saturday.

Traders are waiting to learn whether Russia will scrap duties on wheat imports in face of high domestic wheat prices.

Russia’s government said on Friday it is considering a proposal to suspend a five per cent grain import duty until Aug. 1.

A suspension could increase Russia’s demand for wheat from the world market, although it’s more likely Russia will import E.U. wheat than U.S. wheat, traders said.

— Tom Polansek covers agriculture and the CBOT for Reuters from Chicago. Additional reporting for Reuters by Sam Nelson in Chicago, Naveen Thukral in Singapore and Ivana Sekularac in Amsterdam.