* WHAT: Grains conference in Phuket
* WHEN: Aug 29-30
* U.S. drought, Black Sea supplies in focus
* El Nino may hurt crops in India, Australia
By Naveen Thukral
PHUKET, Thailand, Aug 28 (Reuters) - The fallout from a scorching drought across the U.S. grain belt and poor rains in the Black Sea bread basket will dominate a grains conference in Thailand this week, as global prices hover near record highs and threaten to reignite a food supply crisis.
Below-average rains in other key producers such as Australia, the world's No.2 wheat exporter, and India, the top edible oil importer, would also be in focus at the meeting starting on Wednesday at the southern Thai island of Phuket.
Investors in agricultural markets are closely watching the response from buyers, especially in Asia, which accounts for around three quarters of the world's soybean imports and just under half of corn purchases.
"What is key is how consumers deal with the impact of U.S. drought on one hand and production volatility in other parts of the world such as the Black Sea region, Australia and South America," said Brett Cooper, a senior manager of markets at FCStone Australia.
"Buyers are going to see increased volatility both in terms prices and supplies."
U.S. corn futures have climbed 55 percent since the beginning of June, while soybeans have jumped nearly 40 percent as the worst drought in 56 years curbs yields in the United States, the world's top exporter.
Wheat has surged about 35 percent with the Black Sea drought and poor rains in Australia adding to supply woes.
The 9th Southeast Asia-U.S. Agricultural Cooperators Conference -- organised by lobby groups the American Soybean Association International Marketing, the U.S. Grains Council and the U.S. Wheat Associates -- brings together U.S. exporters and Asian buyers.
This summer's historic drought has inflicted more damage to corn and soybean crops around the U.S. Midwest than the government is predicting, the Pro Farmer newsletter said last week after a tour of the grain belt.
It estimated U.S. corn production at 10.478 billion bushels, based on a yield of 120.25 bushels per acre. That compares with the U.S. Department of Agriculture's (USDA) latest forecast of a 10.779 billion bushel crop on a yield of 123.4 bushels per acre.
Soybean production was seen at 2.60 billion bushels on a yield of 34.8 bushels per acre. Earlier this month, the USDA pegged the soybean harvest at 2.692 billion bushels and yield at 36.1 bushels per acre.
A reduction in demand in Asia, home to the world's biggest soybean importer China and top corn buyer Japan, could undermine prices.
"Demand is still strong but the question is when it falls off the cliff," said one Melbourne-based agricultural analyst. "This really has still not fully fed into major importers as it takes three to four months to have an impact on food inflation."
U.S. drought has also revived a fierce food versus fuel debate.
Livestock and food producers are calling on President Barack Obama to abandon -- at least temporarily -- a government mandate that requires converting more than a third of the U.S. corn crop to ethanol.
Even though the USDA has reduced its forecast of corn use for ethanol, analysts say rising oil prices mean ethanol is still cheaper than gasoline in some places, encouraging refiners to maximize its use in blending.
An El Nino weather pattern, which brings dry weather to most parts of Asia, could also harm crops from Australia to India, deepening concerns about food supplies.
Australia is already facing dry weather in several wheat areas including, the top producing western part of the country. Although Indian monsoon has revived in the last few weeks, concerns remain for cereal and pulses output.
The International Grains Council last week cut global maize production in 2012/13 by 26 million tonnes to 838 million tonnes, well below the prior season's 875 million. Global wheat production in 2012/13 was seen at 662 million tonnes, down 3 million from its previous estimate and well below the prior season's 696 million. (Editing by Ed Davies)