GRAINS-Corn hits 10-day high on supply woes; wheat dips

* Corn up 0.7 pct, soy rises 0.2 pct, wheat down
* Tightening supplies drive U.S. corn, soybeans
* Black Sea supply concerns underpin wheat
* Coming Up: USDA weekly crop progress report

(Adds details, quotes)
By Naveen Thukral
SINGAPORE, Aug 20 (Reuters) - Chicago corn rose to its
highest in more than a week on Monday, resuming its rally on
supply concerns arising from the U.S. grain belt's worst drought
in 56 years, while soybeans ticked up ahead of the government's
weekly crop report.
Wheat edged lower as the market took a breather after
gaining for three straight sessions on fears of tightening
global supplies and expectations of curbs on exports from the
Black Sea region.
"The issues out of Russia are certainly significant for the
wheat market as at the current pace of exports they are likely
to exhaust their surplus by around Christmas time," said Luke
Mathews, a commodities strategist at the Commonwealth Bank of
Australia.
"But we continue to favour corn over wheat as most
significant supply tightness in the global grains market is
certainly within the corn market."
Chicago Board of Trade new-crop December corn rose 0.7
percent to $8.13-1/4 a bushel by 0330 GMT, after touching a high
of $8.14 a bushel, highest since Aug. 10. November soybeans
rose 0.2 percent to $16.49 per bushel, while September
wheat slid 0.2 percent to $8.73 per bushel.
The U.S. Department of Agriculture has cut 2012/13 U.S. corn
crop forecast by 4.011 billion bushels, or 27 percent, over the
past two months. As a result, U.S. inventories at the end of
next summer are now expected to fall to 650 million bushels, a
17-year low and considered near the bare minimum required to
prevent an unprecedented scramble for the last kernels.
More recently, the wheat market has rallied on expectations
of curbs on exports from the Black Sea region.
Russian Agriculture Minister Nikolai Fyodorov on Friday
ruled out a grain export ban but did not exclude "pinpoint
interventions" to influence exports.
Any effort by drought-stricken Russia to restrict grain
exports is likely to provoke a similar move by neighboring
Ukraine, leaving markets bereft of supply from two major Black
Sea producers at a time when dry weather has slashed grain
supply from India to Indiana.
In 2010, Russia banned exports after a severe drought
devastated its wheat crop, boosting Chicago wheat futures about
80 percent that summer to peak at $8.41 per bushel.
In addition, the wheat crop in Australia, the world's No 2
exporter, is being threatened by dry weather, although there is
still time left before farmers begin the harvest in November.
Chicago's corn and soybean markets will be monitoring the
annual exercise this week when fund managers, crop forecasters,
analysts and others in the grain industry begin assessing the
quality of the corn and soybean crops, which have been
devastated by the drought.
Still, the soybean crop in some late-planted areas could
benefit from rains in parts of the Midwest.
Showers brought 1.0 inch to 1.5 inches of rain to the
central Midwest on Thursday last week, and up to 2.5 inches in
west-central Indiana. Forecasts called for dry conditions to
return, although temperatures should be seasonal.
"Weather is the U.S. has certainly improved a touch over the
last couple of weeks," said Mathews. "We wouldn't be surprised
to see another very modest uptick in the weekly ratings by the
USDA tonight."

Prices at 0330 GMT
Contract Last Change Pct chg MA 30 RSI
CBOT wheat 893.00 -1.50 -0.17% 874.18 52
CBOT corn 813.25 6.00 +0.74% 769.02 57
CBOT soy 1649.00 3.25 +0.20% 1585.51 53
CBOT rice $15.41 -$0.01 -0.10% $15.48 45
WTI crude $96.29 $0.28 +0.29% $89.19 80
Currencies
Euro/dlr $1.233 $0.004 +0.36%
USD/AUD 1.044 -0.011 -1.06%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

(Editing by Himani Sarkar)