GRAINS-U.S. corn drops 1.7 percent on rainier Midwest forecast

* More rain possible than previously predicted for coming
    * Spot soy firm on tight stocks, weather pressured deferreds
    * Wheat turns lower late, sheds export-fueled support

 (Updates with closing prices)
    By Karl Plume
    CHICAGO, July 17 (Reuters) - U.S. corn prices fell 1.7
percent on Wednesday as weather models suggested the coming
weeks could be rainier than previously thought in the grain
belt, easing some fears about heat and dryness.
    Soybeans were mixed as the more favorable weather outlook
pressured post-harvest prices while strong processor demand and
thin nearby stocks underpinned the old-crop August contract.
Grains markets are currently highly sensitive to slight changes in weather patterns as crops are nearing critical stages of development, particularly corn, which will be pollinating over the next few weeks. "We've put in enough of a weather premium to cover the sogginess in the east and the dryness in the west for the time being," said Sterling Smith, a futures specialist with Citigroup. A turn to a wetter weather forecast for the next two weeks in the U.S. Midwest will help boost corn and soybean growth and diminish the threat of harm to the pollinating corn crop, an agricultural meteorologist said on Wednesday. "The European weather model made a notable shift toward wetter weather next week in most of the Midwest and a slightly wetter shift in Missouri and Kansas," said Joel Widenor, a meteorologist for Commodity Weather Group. Chicago Board of Trade new-crop December corn fell 8-3/4 cents, or 1.7 percent, to $5.02 per bushel, the contract's third decline in four sessions. Stiff competition in export markets added pressure after news that a South Korean feedmaker purchased Black Sea region corn for December arrival at a steep discount to U.S. prices. New-crop November soybeans slipped 2-3/4 cents, or 0.2
percent, to $12.83-1/2 a bushel. Old-crop August soybeans gained 2-1/4 cents, or 0.2 percent, to $14.77-1/2 a bushel, rising for a third consecutive day. Wheat futures were firmer much of the day amid expectations for improving export demand, but closed lower on spillover pressure from corn and soy. Brazilian importers are in the market for more U.S. hard red winter wheat this week following recent large purchases. Chinese importers are negotiating deals to buy at least half a million tonnes of Australian wheat for January-March shipment to replace some of its weather-damaged domestic crop. China, the world's top wheat grower, may even eclipse Egypt as the top importer on the globe this season after adverse weather damaged up to 20 million tonnes of its milling grade crop, trade sources said. After the close, Egypt's state wheat buyer announced a tender to buy an unspecified amount of wheat on the global market for shipment in late August. CBOT September soft red winter wheat futures fell 4-1/2 cents, or 0.7 percent, to a one-week low of $6.65 a bushel while September hard red winter wheat was a penny lower at $7.02-3/4 a bushel. Prices at 2:41 p.m. CDT (1941 GMT) LAST NET PCT YTD CHG CHG CHG CBOT corn 538.50 -6.75 -1.2% -22.9%
CBOT soy 1477.50 2.75 0.2% 4.1% CBOT meal 469.10 2.30 0.5% 11.5% CBOT soyoil 45.79 0.08 0.2% -6.9% CBOT wheat 665.00 -4.50 -0.7% -14.5% CBOT rice 1528.00 2.00 0.1% 2.8% EU wheat 194.50 0.50 0.3% -22.3% US crude 106.44 0.44 0.4% 15.9% Dow Jones 15,449 -3 0.0% 17.9% Gold 1275.66 -16.33 -1.3% -23.8% Euro/dollar 1.3121 -0.0042 -0.3% -0.6% Dollar Index 82.6680 0.1700 0.2% 3.6% Baltic Freight 1151 -1 -0.1% 64.7% (Additional reporting by Sam Nelson; Editing by Maureen Bavdek and Grant McCool)

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