* Updated forecasts call for more rain, less heat
    * Corn losses partly offset by good export sales
    * Spread unwinding, technical selling hurts soybeans
    * Wheat sinks on spillover pressure from corn, soy

 (Updates with closing prices)
    By Karl Plume
    CHICAGO, July 18 (Reuters) - U.S. corn and soybean prices
retreated for the second straight day on Thursday as forecasts
for milder temperatures and slightly more rain across much of
the Midwest lessened worries about crop damage.
    Slight adjustments to weather forecasts have steered the
grains markets recently. Corn has been jarred most because the
	

		

			
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crop will be pollinating in coming weeks, a critical development
stage when severe heat and a lack of rain can hurt yields most.
    Occasional showers and a lack of extreme heat were expected
across much of the Corn Belt over the next two weeks. That is
better for crops than a previous forecast for hot, dry weather,
which had sent grain prices soaring.
    "It's turned wetter today, even wetter than yesterday which
will certainly help, there's definitely some improvement in the
forecast seen for the next 10 days," said Don Keeney,
meteorologist for MDA Weather Services.
    Strong corn export sales last week helped to offset some of
the pressure in corn from the bearish weather forecast.
    The U.S. Department of Agriculture said net corn sales in
the week ended July 11 were more than 1.7 million tonnes for the
current and new marketing years. Analysts had expected up to 1.6
million tonnes. 
    Unwinding of new-crop corn/soybean spreads also limited
losses in corn, but put pressure in soybeans. The price ratio of
December corn and November soybeans was 2.56-to-1 as of the
close Wednesday.
    "That's the highest we've been since the fall of 2009 on my
monthly continuation chart so we're seeing some inter-commodity
	

		

			
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spread unwinding today. They're buying back December corn shorts
and selling out of their November beans," said Mike Zuzolo,
president of Global Commodity Analytics.
    Chicago Board of Trade December corn fell 1-1/4 cents,
or 0.3 percent, to $5.00-3/4 a bushel after earlier hitting a
10-day low of $4.94. It was the contract's fourth decline in
five sessions.
    CBOT November soybeans dropped 17-3/4 cents, or 1.4
percent, to $12.65-3/4 per bushel. Technical selling developed
as prices fell below the 50-day moving average around $12.68-1/2
to add pressure.
    
    WHEAT RETREATS
    Wheat turned lower after early short-covering support faded,
with prices pressured by harvesting progress of the winter crop 
and spillover from weaker corn and soybeans.
    A large purchase of wheat from the Black Sea region by
Egypt's GASC, the country's price-conscious state wheat buyer,
at a steep discount to U.S. prices underscored the challenges
that soft red winter wheat exports face in the world market.
 
    "They bought all Black Sea wheat and it traded on a landed
basis $40 a tonne cheaper than U.S. wheat," said Roy Huckabay,
analyst with the Linn Group.
    Declines in hard red winter wheat futures were limited as
Brazilian importers are expected to return for more of the
	

		

			
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variety following recent large purchases.
    CBOT September soft red winter wheat dropped 4-1/2
cents, or 0.7 percent, to a 10-day low of $6.60-1/2 a bushel
while September hard red winter wheat shed 1/2 cent to
$7.02-1/4 a bushel.
    
    
 Prices at 1:42 p.m. CDT (1842 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  541.00     2.50   0.5%  -22.5%
 CBOT soy                  1469.25    -8.25  -0.6%    3.6%
 CBOT meal                  470.40     1.30   0.3%   11.8%
 CBOT soyoil                 45.52    -0.27  -0.6%   -7.4%
 CBOT wheat                 660.50    -4.50  -0.7%  -15.1%
 CBOT rice                 1539.00    11.00   0.7%    3.6%
 EU wheat                   194.00    -0.50  -0.3%  -22.5%
 
 US crude                   107.97     1.49   1.4%   17.6%
 Dow Jones                  15,561       90   0.6%   18.7%
 Gold                      1286.40    11.01   0.9%  -23.2%
 Euro/dollar                1.3099  -0.0025  -0.2%   -0.7%
 Dollar Index              82.8480   0.1400   0.2%    3.9%
 Baltic Freight               1146       -5  -0.4%   63.9%
 
 (Additional reporting by Sam Nelson; Editing by Grant McCool,
Jim Marshall and Bob Burgdorfer)