GRAINS-Corn drops to 4-month low on weather outlook

* Corn falls 1.7 percent to more than 4-month low

* Wheat prices down 1.2 percent to nearly 4-month low

* Soybeans pressured by profit taking

* Firm dollar, crude oil drop also add to bearish tone (Recasts, adds closing prices, details)

CHICAGO, July 2 - U.S. corn futures fell on Thursday to their lowest level in more than four months due to forecasts for crop-boosting weather around the Midwest during the next few days, traders said.

"Weather is bearish. Weather is very good for everything," said Vic Lespinasse, analyst for GrainAnalyst.com. "Outside markets also are bearish, with the higher dollar and falling crude oil."

Corn prices were particularly sensitive to the weather forecasts because the U.S. Agriculture Department announced this week that farmers seeded the second-largest amount of corn since 1946, despite a cold and wet spring.

USDA surprised the market on Tuesday with its report that 87.035 million acres (35.2 million hectares) were planted with corn, topping the average analyst forecast for 83.961 million acres.

The prospect for good growing weather during the next few weeks, which is a critical time as corn enters its pollination phase, combined with the acreage report bolstered expectations of a plentiful crop this fall.

On Thursday, Informa Economics predicted the 2009 U.S. corn crop would be 12.524 billion bushels, with an average yield of 156.3 bushels per acre, traders said.

The Chicago Board of Trade July corn futures contract closed down 6 cents at $3.45-3/4 a bushel, a 1.7 percent drop and their lowest level since hitting $3.43-1/2 on March 3.

For the week, corn prices were down 10 percent.

Expectations of a good corn crop also pressured the wheat market which has been on a downward trend for about a month. Livestock producers can use either corn or wheat as feed for their animals and often use price to choose one over the other.

Wheat futures closed at a nearly four-month low on Thursday as a glut of global supplies cast a bearish tone on the market, traders said. Prices also were weighed down by a firm U.S. dollar, which hurt already-weak demand on the export market, and a drop in U.S. equities.

CBOT July wheat settled down 6 cents at $5.00-1/4 a bushel. The contract, which closed at its lowest level since $4.98-3/4 on March 11, was down 6.4 percent for the week.

Some traders were squaring up positions ahead of a long weekend. U.S. grain markets will be closed on Friday in observance of the July 4 U.S. Independence Day holiday.

"Profit taking might be part of the market ahead of the weekend," said Toby Hassall, an analyst with Commodity Warrants Australia.

July soybean futures dropped 15-1/2 cents, or 1.2 percent, to settle at $12.43 a bushel. Traders sold off long positions ahead of the three-day weekend because they did not want to run the risk of a changing weather forecast shifting the market tone before Monday morning.

The soybean market was susceptible to profit taking as fears of supply shortages at U.S. processors and export elevators during the summer months supported prices for much of the week despite the bearish acreage forecasts.

For the week, soybean futures were up 3.5 percent.

Informa pegged the soybean crop at 3.214 billion bushels, traders said, which would be the largest on record. The average yield was expected to be 42.0 bushels per acre.

Good demand from China, the world's top soybean buyer, also has helped support soybean prices.

USDA said on Thursday morning that 443,600 tonnes of U.S. soybeans (193,500 tonnes old crop) sold for export last week, topping forecasts 125,000 to 400,000 tonnes. China booked 68,600 tonnes of old crop, 120,000 tonnes of new crop and shipped 188,600 tonnes.

USDA also confirmed the fresh sale of 660,000 tonnes of U.S. soybeans to China for 2009/10 delivery. CBOT settlement prices

Last Change Pct 2008 YTD

Chg Close Pct Chg --------------------------------------------------------------- CBOT corn 3.4575 -0.0600 -1.7 4.07 -15.0 CBOT soy 12.4300 -0.1550 -1.2 9.7225 27.8 CBOT meal 411.20 -7.00 -1.7 300.5 36.8 CBOT soyoil 0.3518 -0.0064 -1.8 0.3329 5.7 CBOT wheat 5.0025 -0.0600 -1.2 6.1075 -18.1 CBOT rice 12.7750 0.3450 2.8 15.34 -16.7 US crude 66.69 -2.62 -3.8 44.60 49.5 Dow Jones <.DJI> 8317 -187 -2.2 8776 -5.2 Gold 930.20 -9.75 -1.0 878.20 5.9 Euro/dollar <EUR=> 1.4007 -0.0139 -1.0 1.3978 0.2 Dollar Index <.DXY> 80.2490 0.6150 0.8 81.1510 -1.1 Baltic Freight <.BADI> 3672 -70 -1.9 774 374 (Corn, soybean, wheat U.S. cents per bushel) (Rice U.S. cents per hundredweight) (European wheat in euros per tonne) (Crude $ per barrel)