GRAINS-US corn edges lower on easing weather worries

* Forecasts of freezing weather in U.S. Midwest scaled back

* Weather remains key drive as record crops loom

* China gives soybeans some cheer (Updates prices, adds trader comment)

SYDNEY, Sept 18 - U.S. corn futures extended their decline on Friday after falling more than 2 percent a day earlier as weather forecasts eased concerns that frosts could cut yields in the U.S. Midwest.

Still, the December harvest contract on the Chicago Board of Trade has gained nearly 3 percent over the week to date as concerns about a possible September freeze in the Midwest were weighed against continuing mild weather that helped prospects for a record U.S. crop.

Forecasts for a major cold spell made late next week were scaled back on Thursday.

"The concern in the back end of the U.S. forecast that drove corn prices higher has gone away," said Tim Glass, global head of commodities at National Australia Bank Ltd.

He said expectations of ample supplies as the weather outlook improved were keeping prices near 2009 lows though volatility was increasing as traders bet on the weather.

"We are seeing a bit of a two-sided market at these levels as people are concerned about a break-out," said Glass.

The U.S. Agriculture Department is currently forecasting the 2009 American corn crop at a near-record of 12.954 billion bushels and a record soybean output of 3.245 billion bushels.

Soybeans also remain under pressure on forecasts of bumper U.S. crops though China's appetite for U.S. beans continue to lend support.

China was the biggest buyer of American soybeans last week, booking 95 percent of total exports, or 463,400 tonnes.

Chicago Board of Trade soybeans for November delivery rose 0.1 percent to $9.54-¼ per bushel by 0540 GMT while corn for December delivery fell 0.23 percent to $3.28-¼ per bushel. December wheat rose 0.6 percent to $4.64-½ per bushel.

Bumper crops are also depressing wheat prices that are continuing to trade around the lowest level since early 2007.

A week ago the United States Department of Agriculture raised its forecast of 2009/10 world wheat ending stocks to 186.61 million tonnes, from 183.56 million in August.

"The wheat balance sheet fundamentally isn't changing," said Glass.

"It is only getting gyrated around on the upside by corn and beans so if they continue to head down wheat has got very little chance." PRICES AT 0515 GMT Contract Last Change Pct chg Day ago pct MA 30 RSI CBOT wheat 464.00 2.25 +0.49% -0.70% 464.52 38 CBOT corn 328.25 -0.75 -0.23% -2.38% 319.74 50 CBOT soy 955.75 2.75 +0.29% +0.55% 1042.93 50 CBOT rice $13.25 -$0.03 -0.23% -0.15% $13.45 45 WTI crude $72.25 -$0.22 -0.30% -0.36% $70.66 56 Currencies Euro/dlr $1.472 -$0.002 +0.00% +0.00% USD/AUD 0.870 -0.001 +0.00% +0.00%