GRAINS-Soy rises from 3-week low, corn firms ahead of US report

* U.S. soybeans rise 0.7 pct after hitting 3-week low
* Investors cautious before USDA reports at 1230 GMT
* Market expects USDA to cut corn, soy estimates

(Adds details, quotes)
By Naveen Thukral
SINGAPORE, Sept 12 (Reuters) - Chicago soybeans rose on
Wednesday after hitting a three-week low, while corn gained
following two straight days of losses in positioning ahead of
key U.S. reports which will shed light on damage caused by a
historic Midwest drought.
Funds have been liquidating bullish bets in the markets
heading into U.S. Department of Agriculture supply-demand and
crop production reports due at 1230 GMT later on Wednesday.
Some traders expect the USDA to announce further cuts in
soybean and corn estimates, while others suspect the markets
have already factored in the worst drought in 56 years.
"We are expecting a downgrade in soybean production which is
mainly based on the area assessment," said Luke Mathews, a
commodities strategist at the Commonwealth Bank of Australia.
"It will be the same scenario for corn, abandonment (of
acres) is likely to be revised higher for corn, resulting in
overall downgrade in production."
Chicago Board of Trade new-crop November soy rose 0.7
percent to $17.13-3/4 a bushel by 0233 GMT after touching a low
of $16.96-3/4 a bushel, lowest since Aug. 21.
December wheat added 0.4 percent to $8.87-1/2 a bushel
and December corn rose 0.4 percent to $7.81 a bushel.
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Trade estimates for US corn/soy production:
Estimates for US ending stocks:
Trade estimates for global ending stocks:
Graphic: production, stocks: link.reuters.com/myr45s

Graphic: U.S. harvested acres:link.reuters.com/zyt22t

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Analysts polled by Reuters predict the USDA report will show
the drought has slashed nearly 5.0 billion bushels from the corn
crop, or about $40 billion worth at current prices.
For soybeans, analysts on average predict the USDA will trim
its crop forecast to 2.657 billion bushels from 2.692 billion in
August. However, some expect a slight increase from the August
figure because of beneficial Midwest rains last month.
Concerned about tightening supplies, French President
Francois Hollande on Tuesday proposed the creation of strategic
stockpiles of agricultural commodities to prevent extreme price
swings on international markets.

HARVESTS
The advancing corn and soybean harvests have added pressure
to prices as they brought new supplies onto the markets.
The USDA's first update on this year's soybean harvest on
Monday showed the crop was 4 percent harvested, which topped the
five-year average of 2 percent and expectations for 3 percent
harvested.
The USDA also said the condition of soy plants had improved,
reinforcing market sentiment that parts of the Midwest benefited
from rain last month.
The corn harvest was 15 percent complete, above the
five-year average of 5 percent.
In the wheat market, there was support from tightening
supplies in the Black Sea region and dryness curbing yields in
Australia.
Egypt, the world's top wheat importer, bought 235,000 tonnes
of wheat from Ukraine, Russia and France on Tuesday.

It was Egypt's sixth international wheat purchase in a month
and the first time it bought wheat since January. The deals came
amid growing worries that Russia and other Black Sea suppliers
may restrict exports before the end of the year after a drought
slashed production for the second time in three years. But
Russia insists it will not curb exports.
Australia, the world's No. 2 exporter, cut its forecast for
wheat production by about 7 percent from its previous forecast
to 22.5 million tonnes.
Prices at 0233 GMT
Contract Last Change Pct chg MA 30 RSI
CBOT wheat 887.50 3.75 +0.42% 873.99 44
CBOT corn 781.00 3.25 +0.42% 767.94 38
CBOT soy 1713.75 12.25 +0.72% 1587.67 39
CBOT rice $14.78 $0.06 +0.37% $15.46 29
WTI crude $97.08 -$0.09 -0.09% $89.22 67
Currencies
Euro/dlr $1.286 $0.057 +4.64%
USD/AUD 1.047 -0.008 -0.81%
Most active contracts
Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight
RSI 14, exponential

(Editing by Himani Sarkar)