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GRAINS-Corn retreats on forecasts for dry U.S. harvest weather

* Midwest weather seen mostly dry over next 2 weeks
    * Big corn crop weighs on prices, export demand supports
    * Soybeans rebound from Tuesday drop; wheat down for 2nd day

 (Rewrites throughout, adds quotes, updates prices, changes
dateline from LONDON/SINGAPORE, changes byline)
    By Karl Plume
    CHICAGO, Oct 16 (Reuters) - U.S. corn futures fell for the
first time in three sessions as forecasts for mostly dry harvest
weather over the next week weighed on the market, although good
export demand due to prices near three-year lows limited
    Wheat drifted lower for a second day, pressured by sinking
corn and improved crop weather in key production areas, while soybeans clawed back the prior day's modest losses amid support from the rising soyoil market. Trading volumes were light, and prices held within a narrow range as the partial U.S. government shutdown, now in its 16th day, deprived the market of key U.S. Department of Agriculture data. Uncertainty over whether Congress would raise the country's debt ceiling ahead of the Treasury Department's Thursday deadline discouraged aggressive position-taking. Meanwhile, mostly clear harvest weather expected over the next two weeks should allow many Midwest farmers to finish gathering a bumper U.S. soybean crop and probably a record-large corn crop. "The market is just drifting like a ship without a compass," said Citigroup futures specialist Sterling Smith. "With the lack of not just the big USDA reports but the daily data flows, the opaqueness gets thicker with each passing day, and everyone's waiting to see what we get out of the government today." Chicago Board of Trade December corn were down 2-1/4 cents, or 0.5 percent, at $4.41-1/4 per bushel by 10:22 a.m. CDT (1522 GMT). CBOT November soybeans rose 1-1/2 cents to $12.68-1/2
a bushel, and CBOT December wheat shed 4-1/2 cents, or 0.7 percent, to $6.81-1/4 a bushel. The lowest U.S. corn prices in three years reignited demand from importers such as China, which has been in the market in recent weeks. China, the world's second-largest corn consumer, has bought as much as 300,000 tonnes of the grain from the United States this week, trade sources said. The wheat market remained weighed down by talk of India's reducing export prices to boost sales and improved planting weather in Russia, Ukraine and the United States. "The winter wheat regions will make good planting progress over the next two weeks due to limited rains, and temperatures should not be cold enough to hamper germination," said Commodity Weather Group meteorologist Joel Widenor. Prices at 10:29 a.m. CDT (1529 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 441.25 -2.25 -0.5% -36.8% CBOT soy 1269.00 2.00 0.2% -10.6% CBOT meal 401.20 -1.20 -0.3% -4.6% CBOT soyoil 41.16 0.50 1.2% -16.3% CBOT wheat 681.50 -4.25 -0.6% -12.4% CBOT rice 1544.50 -3.50 -0.2% 3.9% EU wheat 198.75 -0.75 -0.4% -20.6% US crude 102.27 1.06 1.1% 11.4% Dow Jones 15,342 174 1.1% 17.1% Gold 1273.41 -6.78 -0.5% -23.9% Euro/dollar 1.3494 -0.0029 -0.2% 2.3% Dollar Index 80.6530 0.1710 0.2% 1.1% (Additional reporting by Naveen Thukral in Singapore, Veronica Brown in London, and Sam Nelson in Chicago; Editing by William Hardy and Lisa Von Ahn)

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