GRAINS-Corn, soy ease from record highs; U.S. crops face more heat

* Corn, soy down from record highs on weak global markets
* Wheat drops 2.2 pct after climbing to four-year top
* Shares, euro pressured as Spain stokes bailout fears
* Forecasts point to more heat in U.S. Midwest this week

(Adds detail, quotes)
By Naveen Thukral
SINGAPORE, July 23 (Reuters) - Chicago corn and soy slid on
Monday after marking record highs last week, tracking declines
in broader markets as worries on Europe's debt woes festered,
though relentless heat in the U.S. grain belt continued to
destroy crops.
Wheat eased after rising to its highest in more than four
years as pressure from weakness in global financial markets
weighed on agricultural futures.
New-crop corn, which has surged 57 percent in the last five
weeks, and soybeans, up 28 percent during the period, are poised
for further gains this week on forecasts of more heat in the
coming days.
"We don't think the rally is over year yet, especially for
corn as demand rationing, which the market has to do, is
something it has never done before in terms of the scale," said
Victor Thianpiriya, an agricultural commodity strategist at ANZ.
"The supply situation for corn and soybeans is extremely
tight."
Chicago Board of Trade new-crop December corn fell 1.2
percent to $7.86 a bushel, while the front-month contract
slid 1.8 percent, after climbing to a record high of $8.28-3/4 a
bushel on Friday.
Spot-month soy gave up 1.5 percent to $17.32 a bushel, down
from Friday's all-time high of $17.77-3/4. September wheat
lost 2.2 percent to $9.23 a bushel after climbing to $9.47-1/4,
its highest since June 2008.
"We are seeing risk aversion throughout the financial
markets," said Luke Mathews, a commodities strategist at the
Commonwealth Bank of Australia. "Crude oil is trading in
negative territory, the U.S. dollar index has opened higher, and
the Aussie dollar has lost more ground this morning."
Shares fell and the euro stayed vulnerable after hitting
fresh lows early on Monday, as concerns grew about Spain's
ability to stave off a sovereign bailout.
Fundamentally, corn and soybeans will receive more support
with forecasts saying the U.S. Midwest's worst drought in 56
year shows no sign of abating.
Investors will also get price direction from Monday's crop
progress report from the U.S. government that is expected to
show another decline in the condition of corn and soybeans crops
in the world's largest exporter of grains.
Traders are expecting a 3 to 5 percentage point drop in the
condition-ratings for both corn and soybeans.
Hotter-than-normal temperatures were expected through
October in most of the contiguous 48 states, the National
Oceanic and Atmospheric Administration said, and did not rule
out drought continuing past October.
It said there was a chance of the El Nino weather anomaly
which could mean more excessive heat and dryness by the end of
2012. El Nino is characterized by unusually warm ocean
temperatures in the equatorial Pacific.
Large speculators raised their net long stake in corn to the
biggest in more than three months as the U.S. drought triggered
a sharp rise in corn prices, regulatory data released on Friday
showed.
The Commodity Futures Trading Commission's weekly
commitments of traders report also showed that non-commercial
traders, a category that includes hedge funds, boosted their net
long stake in soybeans to the most since early May in the five
trading days ended July 17.

Prices at 0242 GMT
Contract Last Change Pct chg Two-day chg MA 30 RSI
CBOT wheat 923.00 -20.25 -2.15% -2.15% 801.87 78
CBOT corn 786.00 -9.75 -1.23% -1.23% 681.99 70
CBOT soy 1660.00 -26.25 -1.56% -1.56% 1498.61 74
CBOT rice $15.53 -$0.01 -0.06% -0.06% $15.03 68
WTI crude $90.60 -$1.23 -1.34% -2.22% $84.64 63
Currencies
Euro/dlr $1.211 -$0.001 -0.10% -0.36%
USD/AUD 1.031 -0.005 -0.52% -0.64%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

(Reporting by Naveen Thukral; Additional reporting by Colin
Packham in Sydney; Editing by Joseph Radford)