GRAINS-Corn, soy higher on worries about late-July U.S. weather

* Forecasts see potential stress during corn pollination
    * New-crop December corn rebounds after 2-1/2-year low
    * Analysts expect improved USDA corn, soy condition ratings
    * Wheat up on short-covering, Chinese demand, Russia worries

 (Updates with closing prices, adds analyst comment)
    By Julie Ingwersen
    CHICAGO, July 8 (Reuters) - U.S. corn and soybean prices
rose Monday on forecasts for stressful heat in the Midwest later
this month, with the new-crop December corn contract rebounding
from a 2-1/2 year low set last week.
    Soybeans drew additional support from tight U.S. cash
supplies of soybeans and soymeal which lifted the front months
	
of both products to contract highs. Wheat firmed on export demand for U.S. grain and concerns about crops in Russia. At the Chicago Board of Trade, September corn futures settled up 7-1/2 cents at $5.33-1/4 per bushel. August soybeans ended up 23-1/2 cents at $14.55-1/2 a bushel while new-crop November soy ended up 24 cents at $12.52-1/4. CBOT September wheat settled up 3 cents at $6.63 a bushel. Weather was the focus for corn traders as the Midwest crop approached its critical pollination phase, when hot and dry weather can cut yield potential. Following planting delays during a cool, wet spring, much of the crop will be pollinating in the second half of July. The Commodity Weather Group (CWG), a private U.S. weather forecaster, said the southwestern portion of the Midwest should see only limited rain in the next two weeks. "This will allow for some minor corn stress to build in parts of Missouri, central and southern Iowa, Nebraska and Kansas," CWG said in a daily note to clients. Added Dan Cekander, an analyst with Newedge USA in Chicago, "The 11- to 15-day forecast was definitely hotter than it was going home Friday ... fear of a developing warmer, drier pattern
in the southwestern Corn Belt is the bottom line." The CBOT December corn contract, which represents the 2013 harvest, ended up 9-1/4 cents at $5.00-1/2 a bushel. The contract fell to $4.89-1/2 on Friday, its lowest level since late 2010. December corn tumbled nearly 12 percent in the previous two weeks as mostly benign crop weather allowed traders to be more confident about prospects for U.S. corn production. The U.S. Department of Agriculture has projected the crop at a record-large 14.005 billion bushels. Recent crop weather has been mostly favorable, and the USDA's weekly U.S. crop progress report due later on Monday is expected to show an improvement in crop ratings. Analysts surveyed by Reuters expected USDA to rate 68 percent of the corn and soybean crops in good to excellent condition, both up from 67 percent a week earlier. CONTRACT HIGH IN JULY SOYBEANS Soybeans followed corn higher, with the spot July soybean and soymeal contracts drawing added support from extremely tight U.S. cash markets. CBOT July grain and oilseed contracts expire on Friday, adding to volatility in the spot months. July soybeans settled up 21-1/4 cents at $16.09-1/4 a
bushel after setting a contract high at $16.16-1/4. July soymeal set a contract high at $512 per short ton and settled at $511.10, up 4.5 percent for the day. "You've got no supply," said Sterling Smith, futures specialist with Citigroup in Chicago, referring to U.S. soymeal. "The long side of the market has got the short pinned. If you don't have the stuff to deliver, you've got to get out." WHEAT HIGHER AFTER CHINA PURCHASE Wheat futures rose on short-covering and supportive fundamental news, including more sales of U.S. soft red winter wheat to China. The USDA on Monday confirmed private sales of 840,000 tonnes of soft red wheat to China for 2013/14 shipment, bringing China's purchases since last week to more than 1.3 million tonnes. Meanwhile, after a promising start to the U.S. soft red winter wheat harvest, rains in the eastern Midwest and mid-South have slowed progress and threatened crop quality, agronomists said. Also, two leading agricultural analysts on Monday cut their forecasts for Russia's 2013 wheat crop, citing drought in several growing regions and lower-than-expected yields. Prices at 2:04 p.m. CDT (1904 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 533.25 7.75 1.5% -23.6% CBOT soy 1455.50 23.50 1.6% 2.6% CBOT meal 442.10 13.50 3.2% 5.1% CBOT soyoil 46.96 -0.18 -0.4% -4.5% CBOT wheat 663.00 3.00 0.5% -14.8% CBOT rice 1480.50 -15.00 -1.0% -0.4% EU wheat 193.50 -1.25 -0.6% -22.7% US crude 103.04 -0.18 -0.2% 12.2% Dow Jones 15,231 96 0.6% 16.2% Gold 1236.25 12.94 1.1% -26.2% Euro/dollar 1.2874 0.0044 0.3% -2.4% Dollar Index 84.1850 -0.2620 -0.3% 5.5% Baltic Freight 1115 16 1.5% 59.5% (Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Richard Pullin, Keiron Henderson, Chris Reese and Jim Marshall)

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