GRAINS-CBOT firm on dollar, economy; Euronext hit by harvest

* Buyers drawn by weak dollar as shares, oil pursue rally

* New-crop soy up 2 percent after drop, corn up again on exports

* Euronext stays weak on harvest, rapeseed hits new lows

* Favourable U.S. crop weather still weighing on markets

PARIS/SINGAPORE, July 28 - Chicago grain futures were higher on Tuesday as a weak dollar and positive sentiment about an economic recovery offset favourable crop weather in the the key growing region of the U.S. Midwest.

New-crop soybeans led the way, adding 2 percent to recover from two straight falling sessions, while corn extended gains on higher-than-expected U.S. exports.

"Dollar depreciation has got a bigger part to play than any fundamental factors at this stage," said John Reeve, director of agricultural commodities at Standard Chartered Bank in Singapore.

The dollar traded at an eight-week low against the euro as investors looked for perceived riskier bets, buoyed by Monday's news of a surge in U.S. home sales.

A lower dollar makes U.S.-priced commodities cheaper for buyers holding other currencies.

But European grain futures diverged from other markets to pursue their fall under pressure from the ongoing harvest of winter crops that is expected to show high yields.

Rapeseed on Euronext was worst hit, sliding to contract lows amid expectations of large crops in leading European producers Germany and France.

"We've got a very big (rapeseed) harvest in Europe," one trader said. "There aren't a lot of buyers while cooperatives everywhere are selling."

Euronext wheat futures were also dented by the harvest, with the benchmark new-crop contract edging down to stay at its lowest level since Dec. 12.

Heavy rains in recent days were not thought to have had a serious impact on yields in France, although doubts remained about the quality of the grain.

"Concerns about output are subsiding. But we're not looking at quality like 12 percent protein that would give us a foothold in more exotic export destinations," another trader said.

Export hopes for French grain were also being dampened by the strength of the euro against the dollar, operators stressed.

BULLISH U.S. CORN EXPORTS

By 1047 GMT, November milling wheat on Euronext was down 0.74 percent at 134.25 euros a tonne, while November rapeseed was off 1.63 percent at 256.50 euros a tonne, after setting a new contract low at 256.00 euros.

On the Chicago Board of Trade, new-crop November soy contract rose 2.07 percent to $9.25-1/4 a bushel, while spot-month August soybean rose 2.08 percent to $10.42-1/2.

September corn futures added 0.70 percent to 3.24-1/2 a bushel, building on 2 percent gains in the previous session. Septembter wheat edged up 0.53 percent to $5.23-1/4.

USDA on Monday said 52.2 million bushels of U.S. corn were inspected for export last week, above trade expectations for 30 million to 35 million.

But the grain markets remain under pressure as favourable weather prevails over the top growing U.S. Midwest region, boosting corn and soybean crops.

Mild summer temperatures are helping corn which is in the critical pollination stage.

The U.S. Department of Agriculture said after the market closed on Monday that 70 percent of corn was in good to excellent condition compared with 71 percent a week ago and 66 percent last year. Soybeans were 67 percent good to excellent, the same as a week ago.

Grains prices as of 1047 GMT Product Last Change Percent Move End 2008 Ytd Percent

move CBOT corn 324.50 2.25 -0.70 407.00 -20.27 CBOT soy 1042.50 21.25 +2.08 972.25 +7.23 CBOT wheat 523.25 2.75 -0.53 610.75 -14.33 CBOT rice 13.64 -0.14 -0.98 15.34 -11.08 European wheat 134.25 -1.00 -0.74 145.75 -7.89 US crude 68.34 Euro/dollar 1.4273 (Front-month contracts except for European wheat whose August contract is illiquid) (Corn, soybean, wheat U.S. cents per bushel) (Rice U.S. cents per hundredweight) (European wheat in euros per tonne) (Crude $ per barrel)