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GRAINS-Corn drops 1% on U.S. crop report, soybeans ease after rally

* Corn hits one-week low after strong August rally

* U.S. weekly crop ratings better than expected

* Soybeans ease for first time in seven sessions (Adds quote in paragraph 3, details on fund positioning)

SINGAPORE, Sept 1 (Reuters) - Chicago corn futures slid on Tuesday, giving up some of the previous month’s strong gains after the U.S. Department of Agriculture (USDA) said the condition of crops was better than expected, easing concerns over yield losses.

Soybeans eased for the first time in seven sessions, while wheat rose for a second straight day.

“The rally in corn prices was largely fund driven,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. “The world has plenty of corn, there are no shortages.”

The most-active corn contract on the Chicago Board Of Trade was down 0.8% to $3.55 a bushel by 0335 GMT, near the session low of $3.51 a bushel - the weakest since Aug. 25. Corn gained more than 9% in August.

Soybeans fell 0.1% to $9.53 a bushel and wheat added 0.2% to $5.53-1/2 a bushel.

The USDA rated 62% of the corn crop in good-to-excellent condition in its weekly crop progress report, down 2 percentage points from the previous week, but just above an average of expectations in a Reuters survey of 11 analysts.

Soybean ratings declined to 66% good-to-excellent, down 3 points from a week earlier and in line with trade expectations.

Canadian farmers are set to harvest the biggest wheat crop in seven years and slightly less canola, Statistics Canada said on Monday in its first production estimates.

The U.S. soybean crush is expected to have increased in July after three straight monthly decreases, rising to 5.491 million short tons, or 183.0 million bushels, according to the average forecast of seven analysts surveyed by Reuters ahead of a monthly USDA report.

Commodity funds were net buyers of CBOT soybean, wheat and soymeal contracts on Monday, net sellers of soyoil and net even in corn, traders said. (Reporting by Naveen Thukral; Editing by Subhranshu Sahu)

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