GRAINS-Wheat futures down 1.5 percent on profit taking

* Profit taking pressures wheat after short-covering boost

* Corn, soybeans fall on drier weather forecast

* Firm dollar adding to bearish tone of grain markets (Updates with CBOT trading; new dateline, byline, analyst)

CHICAGO, Oct 16 - Wheat futures fell 1.5 percent at the Chicago Board of Trade on Friday as traders locked in profits following a short-covering rally earlier in the week.

"We have had strong gains for the week," said Shawn McCambridge, grains analyst with Prudential Bache Commodities. "We are just seeing some profit taking. Prices were overbought and really we just don't have the fundamental reason to rally these prices."

Wheat prices were still under pressure from plentiful stocks around the globe and low demand for U.S. supplies on the export market.

At 11:41 a.m. CDT (1619 GMT), CBOT December soft red winter wheat was down 7-1/2 cents at $4.97-1/2 a bushel.

Corn and soybean futures also were lower due to expectations for a pick-up in the pace of the delayed corn and soybean harvests.

"The majority of the private forecasters are suggesting that we are going to have some drier weather moving in, at least until next Tuesday," said Joe Victor, analyst for Illinois research and advisory firm Allendale Inc.

CBOT November soybean futures were down 5-1/2 cents at $9.77-1/2 a bushel, while CBOT December corn was off 3-1/4 cents at $3.69-3/4 a bushel.

Damp conditions around the Corn Belt were limiting the drops in corn and soybean futures.

Freezing weather in some parts of the Midwest during the past week could have compromised 125 million bushels of corn and 20 million bushels of soybeans, according to Hussein Allidina, head of commodity research at Morgan Stanley.

But the market was still expecting a bumper harvest of both crops in the next few weeks.

"Absent further weather disruptions, we contend that the market is likely to feel some harvest pressure as farmers are able to get into their fields," Allidina said in a research note to clients.

Outside markets continued to have a strong bearing on the grains complex, with prices very sensitive to dollar movements.

A firm dollar, which hurts demand for U.S. commodities on the export market, also was weighing on grain futures on Friday.

The U.S. Agriculture Department said on Friday morning that export sales of wheat last week totaled 480,100 tonnes, at the low end of trade estimates for 450,000 to 650,000 tonnes.

"Wheat sales are just uninspiring, " Allendale's Victor said.

Export sales of corn were 631,900 tonnes, within trade estimates for 600,000 to 800,000 tonnes. Soybean export sales were 654,600 tonnes, topping forecasts for 450,000 to 650,000 tonnes. Prices at 11:45 a.m. CDT (1645 GMT)

Pct 2008 YTD

Last Change Chg Close Pct Chg ----------------------------------------------------------- CBOT corn 3.7125 -0.0175 -0.5 4.07 -8.8 CBOT soy 9.7775 -0.0525 -0.5 9.7225 0.6 CBOT meal 293.60 -2.60 -0.9 300.5 -2.3 CBOT soyoil 0.3687 0.0009 0.2 0.3329 10.8 CBOT wheat 4.9850 -0.0650 -1.3 6.1075 -18.4 CBOT rice 13.5950 -0.2000 -1.5 15.34 -11.4 EU wheat 126.75 0 0.0 137 -7.5 US crude 77.21 -0.37 -0.5 44.60 73.1 Dow Jones 9961 -102 -1.0 8776 13.5 Gold 1050.35 0.50 0.0 878.20 19.6 Euro/dollar 1.4877 -0.0065 -0.4 1.3978 6.4 Dollar Index 75.6830 0.2020 0.3 81.1510 -6.7 Baltic Freight 2728 40 1.5 774 252 *In U.S. dollars, front-month contracts, except EU wheat, which is in euros, CBOT wheat, corn and soybeans per bushel, rice per hundredweight, soymeal per ton and soyoil per lb.