* Traders evening up ahead of Friday's USDA report
    * Soybeans also supported by tight U.S. supply
    * Corn rallies even as planting gains momentum

 (Recasts, updates with closing prices, adds new analyst quote)
    By Mark Weinraub
    CHICAGO, May 9 (Reuters) - U.S. grains and soybeans rallied
on Thursday, with soybeans touching their highest level in
nearly two months, as traders covered short positions ahead of a
monthly U.S. Agriculture Department report.
    Wheat and corn notched the biggest gains, surging 2.5
percent, but the bullish tone supported the entire agricultural
complex.
    "This looks like a short-covering rally in front of
	

		

			
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tomorrow's USDA report," said Chris Robinson, senior trader at
Top Third Ag Marketing. "Nobody is expecting a lot of fireworks
out of it but you just never know. We are just evening up in
front of the number."
    Corn rose even as planters rolled across the U.S. Midwest,
allowing many farmers to make their best progress of the
weather-delayed seeding season.
    A firmer cash market - basis values were trending near
record levels at soybean processors - provided a pillar of
support to futures prices. Better-than-expected export demand
added additional strength to soybeans.
    "What this boils down to is just tight supplies," said Dewey
Strickler, president of Ag Watch Market Advisors, a grain
industry consultancy.
    The most-active Chicago Board of Trade July soybean contract
 settled up 18 cents at $14.08-3/4 a bushel. Prices briefly
passed through their 100-day moving average and settled above
that key technical point for the first time since March 27.
    The May soybean contract, which is in its delivery
period, was up 12-1/4 cents at $14.91-1/4 a bushel and hit its
highest level since March 12.
    USDA said early Thursday that old-crop soybean export sales
totaled 193,800 tonnes in the latest reporting week, topping
	

		

			
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market forecasts for zero to 100,000 tonnes.
    CBOT July soft red winter wheat was 17-1/2 cents
higher at $7.23-1/2 a bushel.
    Analysts expect the USDA report on Friday to show that 2013
U.S. winter wheat production will fall 9 percent from a year ago
in its first official estimate of the 2013 crop. 
    
    "Private estimates ... continue to point to a significant
tightening in U.S. hard red winter and hard red spring wheat
supplies in 2013/14," said Luke Mathews, analyst at Commonwealth
Bank of Australia. "This will help pull total wheat supplies
lower in the year ahead, providing price support to the
complex," 
    CBOT July corn was 15-3/4 cents higher at $6.48-3/4 a
bushel.
    Some planting was taking place in the U.S. Midwest this
week, which has been drenched by heavy rain that kept farmers
sidelined throughout April and early May. Full-scale seeding was
expected over the weekend but another round of showers could
stall farmers again next week.
    "The 11- to 15-day forecast leans wetter as well and will
cause widespread interruptions to seeding in the Midwest," 
Commodity Weather Group meteorologist Joel Widenor said.
 Prices at 1:36 p.m. CDT (1836 GMT)      
                              LAST      NET    PCT     YTD
                                        CHG    CHG     CHG
 CBOT corn                  694.50    19.50   2.9%    7.4%
 CBOT soy                  1491.25    12.25   0.8%   24.4%
 CBOT meal                  440.10    14.80   3.5%   42.2%
 CBOT soyoil                 49.07     0.41   0.8%   -5.8%
	

		

			
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 CBOT wheat                 716.25    19.50   2.8%    9.7%
 CBOT rice                 1528.50    21.00   1.4%    4.7%
 EU wheat                   245.25     3.00   1.2%   21.1%
 
 US crude                    96.18    -0.45  -0.5%   -2.7%
 Dow Jones                  15,123       18   0.1%   23.8%
 Gold                      1461.79   -10.40  -0.7%   -6.5%
 Euro/dollar                1.3029  -0.0122  -0.9%    0.6%
 Dollar Index              82.7250   0.8290   1.0%    3.2%
 Baltic Freight                889       -3  -0.3%  -48.8%
 
 (Additional reporting by Colin Packham in Sydney; editing by
Sofina Mirza-Reid and Jim Marshall)