* Dry Midwest forecast this week to trim soy yields
* Corn sinks on weak cash market, wheat follows
* Soy, corn crop conditions seen falling in weekly report
(Updates with closing prices, fund buying and selling totals)
By Karl Plume
CHICAGO, Sept 3 (Reuters) - U.S. soybean futures surged more
than 2 percent on Tuesday as dry weather in key production areas
of the U.S. farm belt eroded crop conditions and threatened
But corn futures fell more than 1 percent on weak cash
markets as the harvest crept northward from the southern United
States, where some farmers produced record-large yields, to the
heart of the Corn Belt.
The U.S. Agriculture Department's ratings of both crops were
expected to drop following recent dry weather and severe heat,
but the soybean crop was much more vulnerable to the stressful
weather as the corn crop was closer to maturity.
Analysts expect the percentage of the U.S. soybean crop
rated good to excellent to fall four percentage points in a
weekly USDA report due later in the day, while corn conditions
were expected to drop three points.
Modest rainfall over the weekend missed some of the driest
areas of the Midwest, and the weather was expected to be dry
this week, forecasters said.
"Rains over the weekend were pretty good in the Missouri
Valley but not so much elsewhere and that's what's driving
soybeans higher today," said Sterling Smith, futures specialist
Commodity Weather Group meteorologist Joel Widenor said the
weekend rains were better than expected along the Iowa-Nebraska
border but missed many of the driest Midwest soybean areas.
"About 40 percent of the soybean belt remains severely dry
and will continue to see yield losses mount as growth finishes
up," he said.
November soybeans on the Chicago Board of Trade rose
29-1/4 cents, or 2.2 percent, to $13.86-3/4 per bushel after
coming to within a penny of last week's 11-month high of
$14.09-1/2 a bushel.
Corn followed soybeans higher early but buying interest
faded under pressure from a rising harvest and limited export
demand amid competition from lower-cost suppliers such as
Ukraine and Brazil.
December corn futures fell 6-3/4 cents, or 1.4
percent, to $4.75-1/4 per bushel, their steepest drop in a week.
Selling accelerated as prices fell below the 50-day moving
average around $4.88-1/2 a bushel.
"Corn is weakening on some pretty big drops in basis in the
cash market, especially in the central part of the country,"
said Mike Zuzolo, president of Global Commodity Analytics.
Cash corn basis bids around the Midwest have eroded in
recent days. The bid at a closely watched Decatur, Illinois,
processor was the lowest in two months.
Wheat futures fell for a fifth consecutive session on
spillover pressure from sinking corn and on weak export demand.
Actively traded December wheat fell 6-3/4 cents, or 1
percent, to a 1-1/2-week low of $6.47-1/4 a bushel.
Commodity funds sold an estimated net 9,000 corn contracts
and 2,000 wheat contracts but bought a net 9,000 soybean
contracts, trade sources said.
Prices at 2:08 p.m. CDT (1908 GMT)
LAST NET PCT YTD
CHG CHG CHG
CBOT corn 498.00 3.00 0.6% -28.7%
CBOT soy 1435.50 11.50 0.8% 1.2%
CBOT meal 485.40 17.20 3.7% 15.4%
CBOT soyoil 43.82 -0.07 -0.2% -10.9%
CBOT wheat 636.50 -6.75 -1.1% -18.2%
CBOT rice 1579.00 -1.50 -0.1% 6.3%
EU wheat 188.75 -1.25 -0.7% -24.6%
US crude 108.56 0.91 0.9% 18.2%
Dow Jones 14,831 20 0.1% 13.2%
Gold 1411.85 17.56 1.3% -15.7%
Euro/dollar 1.3166 -0.0025 -0.2% -0.2%
Dollar Index 82.3690 0.2820 0.3% 3.3%
Baltic Freight 1168 29 2.6% 67.1%
(Additional reporting by Sam Nelson; Editing by Jim Marshall
and James Dalgleish)