* Corn, soy extend gains after USDA report on Thursday
* Traders expect further drop in U.S. corn, soy forecasts
* Tightening global supplies, demand hopes lift wheat (Rewrites throughout with U.S. market open, adds quote, updates prices, changes byline, changes dateline from LONDON)
CHICAGO, Oct 12 (Reuters) – U.S. soybean futures rose for a second straight session on Friday on short-covering and follow-through buying after a government report the prior day forecast a smaller-than-expected U.S. harvest.
Corn also advanced after the U.S. Department of Agriculture (USDA) unexpectedly cut its U.S. corn yield outlook in a monthly report on Thursday and as traders braced for possible further cuts to the agency’s crop outlook.
Wheat prices jumped on tightening global supplies and hopes for a U.S. export revival given smaller crops in rival suppliers Russia and Australia.
“Yesterday’s report laid the groundwork that the big crops are not getting bigger in USDA’s eyes,” said Mike Zuzolo, president of Global Commodity Analytics.
Rainy harvest weather in the central United States further fuelled those concerns, he said.
“There are lots of soybeans in the fields, but are those beans actually going to get into the bins and into the marketing supply chain?” he said.
Chicago Board of Trade November soybeans rose 9-1/4 cents to $8.67-1/2 a bushel by 11:13 a.m. CDT (1613 GMT), holding chart support at its 50-day moving average.
December corn touched a new seven-week high and was up 4-1/4 cents at $3.73-1/2 a bushel.
Drier weather is expected across the U.S. Midwest in the second half of October, but heavy rains this week have already delayed the harvest and may have damaged some crops.
The USDA is due to update crop progress and condition ratings on Monday afternoon.
Soybean traders are monitoring trade tensions between the United States and China, which cancelled some of its U.S. soybean purchases last week, according to USDA data released on Friday.
China brought 8.01 million tonnes of the oilseed in September, down from 9.15 million tonnes in August and below the 8.11 million tonnes in September 2017, according to Reuters calculations based on Chinese customs data.
The wheat market was underpinned by tightening world supplies after the USDA cut its crop forecasts for Russia and Australia on Thursday. Traders are anticipating a pickup in the sluggish pace of U.S. wheat export sales as prices have recently slipped to levels that are more competitive in the global marketplace.
CBOT December wheat rose 10-1/4 cents to $5.18-1/4 a bushel. (Additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London; Editing by David Goodman and James Dalgleish)