GRAINS-Soybeans fall on profit-taking, hedge sales

* Soy falls as dollar bounces, some harvest hedge pressure

* Corn, wheat also slip amid profit-taking

* US corn/soy harvest slowest pace in at least two decades (Updates prices, adds analyst quotes, changes dateline from SYDNEY)

CHICAGO, Oct 20 - U.S. soybean prices fell on Tuesday in a spurt of profit-taking after rising more than 6 pct over the past two weeks despite seasonal harvest pressure.

"There is some profit taking but we're seeing some pretty widespread harvest activity with hedge pressure coming through," said Gavin Maguire, an analyst with Chicago brokerage EHedger, said.

"These are great prices -- $10 beans -- so it makes sense that we see some hedge pressure coming through finally."

The grains were also weaker after their recent run-up due to a flow of investment money into commodities as the dollar collapsed.

A cheaper dollar makes U.S. exports like corn and soybeans more affordable for overseas buyers and attracts investment dollars into commodities as a hedge against inflation.

But the dollar turned course on Tuesday after sliding to a near 14-month low against a basket of currencies. The dollar has been under pressure as the global growth outlook improves and the market anticipates record low U.S. interest rates staying in place well into next year.

"The dollar is the main driver across all commodities, although there's still concerns about weather conditions in the United States that could affect the crops," said Stefano Vincelli, a trader at Halifax Investment Services.

Vincelli said commodity traders, like foreign exchange dealers, would be carefully scrutinizing any comments from Federal Reserve chief Ben Bernanke to gauge whether interest rate rises are on or off the central bank's agenda.

"I'm watching grains and metals all day long and at the moment it is more a currency trade than a supply-and-demand story," he said.

Chicago Board of Trade soybeans for November delivery were down 12-1/4 cents, or 1.2 percent, at $9.84 a bushel by midmorning.

CBOT December corn was 4-1/2 cents, or 1.2 percent, weaker at $3.81-3/4 a bushel. Chicago wheat fell 6-3/4 cents, or 1.3 percent, to $5.11.

The rice market was also under pressure, falling the 50-cent daily trading limit early as harvest prospects improved in the Mississippi Delta region. CBOT November rice was down 28-1/2 cents at $13.58-1/2 per hundredweight.

The U.S. Department of Agriculture weekly crop progress report late Monday showed that the corn and soybeans harvests were off to their slowest starts since at least 1985 when the agency began issuing weekly harvest progress figures.

The USDA reported the U.S. corn harvest at 17 percent complete as of Sunday, up only four points from the previous week and behind the five-year average of 46 percent.

The U.S. soy harvest was just 30 percent complete by Sunday, up seven points from the previous week but lagging the five-year average of 72 percent.

Persistent rain has turned fields to mud and made it difficult to operate harvest equipment. Storms are forecast to return to the U.S. Midwest late Tuesday, threatening to close a harvesting window that opened last weekend when weather improved.

A record U.S. soybean crop of around 3.25 billion bushels is expected, boosting world supplies at a time when production in South America, the second largest soy exporter after the United States, is recovering from drought.

The USDA said the U.S. winter wheat crop was 69 percent planted, up from 64 percent a week earlier but behind the recent average of 78 percent.

Prices at 10:44 a.m. CDT (1544 GMT)

Pct 2008 YTD

Last Change Chg Close Pct Chg --------------------------------------------------------------- CBOT corn Cc1> 3.8175 -0.0450 -1.2 4.07 -6.2 CBOT soy Sc1> 9.8400 -0.1225 -1.2 9.7225 1.2 CBOT meal SMc1> 295.00 -3.30 -1.1 300.5 -1.8 CBOT soyoil BOc1> 0.3720 -0.0039 -1.0 0.3329 11.7 CBOT wheat Wc1> 5.1100 -0.0675 -1.3 6.1075 -16.3 CBOT rice RRc1> 13.4850 -0.3850 -2.8 15.34 -12.1 EU wheat BL2c1> 127.75 0.25 0.2 137 -6.8 US crude CLc1> 78.41 -1.2 -1.5 44.60 75.8 Dow Jones .DJI> 10015 -77 -0.8 8776 14.1 Gold XAU=> 1054.90 -7.80 -0.7 878.20 20.1 Euro/dollar EUR=> 1.4891 -0.0082 -0.5 1.3978 6.5 Dollar Index .DXY> 75.7270 0.2170 0.3 81.1510 -6.7 Baltic Freight .BADI> 2832 66 2.4 774 266 ---------------------------------------------------------------- *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.