U.S. corn futures fell 1.2 per cent on Friday as the Midwest harvest progressed at a record pace and after private forecaster Informa Economics raised its yield and production estimates for the drought-hit 2012 U.S. crop.

Soybean futures finished unchanged as support from solid demand, including China buying 180,000 tonnes, faded amid pressure from a record-fast U.S. harvest and as Informa raised its U.S. soy crop outlook midmorning.

Wheat dropped 1.4 per cent, pressured by lower corn and as beneficial rains this week in the U.S. Plains wheat belt were seen boosting winter crop planting. Wheat notched its steepest weekly decline in four months.

Trading was choppy as investors squared positions before the weekend and ahead of next week’s monthly U.S. Department of Agriculture crop production report.

"We’re getting some positioning before the weekend and ahead of the Oct. 11 (USDA) report. We’ve seen a decent rebound in soybean prices and guys are moving to the sidelines," said Brian Basting, analyst with Advance Trading.

"Corn harvest is nearing 70 per cent nationwide and farmers are moving on to soybeans, though soybeans are going to be slowed for a couple of days because of some rain," he said.

Informa Economics said on Friday it expects USDA to raise its U.S. corn production forecast to 11.194 billion bushels, based on a yield of 127 bushels per acre. Soybean production was seen at 2.86 billion bushels, based on a yield of 37.8 bushels per acre.

The firm previously forecast the corn crop at 11.093 billion bushels, yielding 126.6 bushels per acre, and a soy crop of 2.663 billion bushels with yields at 35.2 bushels.

It was the latest private forecast suggesting crop damage from the worst U.S. drought since 1956 was not as bad as feared, particularly the soybean crop, which was revived by timely August rains.

Commodity brokerage FCStone also raised its corn and soybean forecasts this week as harvest reports topped expectations.

Demand rationing

Soybean prices fell to a three-month low this week, almost US$3 a bushel below the all-time high posted just a month ago. The price drop has renewed demand for the oilseed, stoking concerns that demand was not being rationed enough to maintain a stocks cushion this season.

Chinese importers bought 180,000 tonnes of U.S. soybeans for shipment in the 2012-13 marketing year, USDA said on Friday.

Traders were encouraged by the purchase because Chinese demand has been slow all week as markets there were closed for a national holiday.

The announcement also came a day after USDA said U.S. soybean export sales jumped to a three-month high last week.

"China is on holiday but we did have a purchase today, which tells us we’re back at some sort of value price," said Don Roose, president of U.S. Commodities.

"The trade is concerned that if we weren’t rationing almost $3 ago then we sure aren’t rationing now," he said, referring to the drop in soybean prices from a month ago.

Chicago Board of Trade (CBOT) November soybeans settled at $15.51-1/2 per bushel, unchanged on the day but down 3.1 per cent from a week ago, the market’s third consecutive weekly decline (all figures US$).

CBOT December corn fell nine cents, or 1.2 per cent, to $7.48 per bushel. Corn’s 1.1 per cent weekly drop was the market’s fourth decline in five weeks.

CBOT December wheat futures followed corn lower, shedding 11-3/4 cents to settle at $8.57-1/2 per bushel, down 1.4 per cent on the day and five per cent on the week, the steepest weekly break in four months.

Commodity funds were net sellers of an estimated 8,000 corn contracts and 3,000 wheat contracts on the day and net buyers of 2,000 soybean contracts, trade sources said.

— Karl Plume writes for Reuters from Chicago.