GRAINS-Soy lower as supply worries ease, weather looks promising

* Soy, corn post weekly losses after USDA data, mild weather

* Wheat bounces after multi-month lows, but ends week down

* CBOT closed Friday, reopens Monday at 8:30 a.m. CDT/1330 GMT (Updates with closing prices)

By Julie Ingwersen

CHICAGO, July 3 (Reuters) – U.S. soybean futures fell on Thursday, retreating from early gains as worries about tight old-crop supplies abated and forecasts called for favorable weather that should bolster yields, traders said.

Corn followed soybeans lower, while wheat rose in a short-covering bounce after hitting multi-month lows this week. U.S. markets will be closed on Friday for the Independence Day holiday.

In a shortened, pre-holiday session at the Chicago Board of Trade, August soybean futures settled down 15 cents at $12.99-3/4 per bushel, dropping below psychological support at $13.

The contract ended the week down nearly 6 percent, pressed by a U.S. Department of Agriculture report on Monday that showed old-crop soybean supplies above trade expectations, although still historically low.

Additional pressure stemmed from prospects for an early soy harvest in the Mississippi River Delta that could replenish tight U.S. inventories weeks ahead of the primary Midwest harvest.

“I think we could see $12.50 on August beans, mainly because of the number of beans in the South that can come north. Those guys planted a lot of beans as early as they could, and they are undermining the spreads,” said Gordy Linn, president of the Linn Group, a Chicago brokerage.

Corn followed soybeans lower on near-ideal weather as the corn crop nears pollination, a critical stage in determining yield. The U.S. Midwest has received significant rains in recent weeks, and forecasts showed no sign of damaging heat.

“You would think there might be a bit of short-covering ahead of the weekend, but the forecast is favorable, and it’s hard to get anything going,” said Dan Cekander, analyst with Newedge USA.

USDA reported weekly export sales of U.S. soybeans, corn and wheat toward the high end of trade expectations, but the data failed to spark a rally.

“The lackluster response to today’s export sales reports underscores that (the) market’s primary focus is (the) improving new-crop supply outlook,” R.J. O’Brien analyst Rich Feltes said in a client note.

Benchmark December corn settled down 2-3/4 cents at $4.15-1/4 a bushel after hitting a contract low at $4.14-1/2. For the week, the contract fell 7.2 percent.

CBOT wheat firmed on bargain buying. Most-active September rose 4 cents at $5.79-1/2 a bushel, up from Monday’s five-month low of $5.67-1/2. But the contract still finished the week down 2.4 percent.

Prices at 1:31 p.m. CDT (1831 GMT)                 
                              LAST      NET    PCT  
                                        CHG    CHG  
 CBOT corn                  409.00    -2.75  -0.7%  
 CBOT soy                  1297.50   -15.00  -1.1%  
 CBOT meal                  418.50    -9.00  -2.1%  
 CBOT soyoil                 38.67     0.10   0.3%  
 CBOT wheat                 579.50     4.00   0.7%  
 (Additional reporting by Gus Trompiz in Paris and Naveen
Thukral in Singapore; Editing by David Evans, Grant McCool and
Diane Craft)

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