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GRAINS-Wheat hits 2-week low on spreading; corn, soy ease

(Updates U.S. market activity to close, adds analyst comments;
changes byline, dateline, previously PARIS/SYDNEY)

By Michael Hirtzer

CHICAGO, July 17 (Reuters) - Chicago Board of Board of Trade
wheat futures fell to a roughly two-week low on Monday
while MGEX spring wheat gained 1 percent in wheat
spreading as dry conditions stressed the spring wheat crop in
the northern U.S. Plains, traders said.

Investors were selling most-active CBOT wheat and buying
MGEX wheat as U.S. winter wheat varieties remained too expensive
in global markets even as drought conditions in the Dakotas and
Montana reduced yield prospects for the spring wheat harvest.

"We have a demand drag on this market. It's just enough to
offset the weather fears," Global Commodities Analytics
president Mike Zuzolo said of U.S. wheat.

CBOT September soft red winter wheat futures finished
4-3/4 cents lower at $5.06 per bushel, lowest since June 30.
K.C. September hard red winter wheat declined 7 cents to
$5.06-1/2 per bushel and MGEX September spring wheat
was 9-1/4 cents higher to $7.67-1/4 per bushel.

The U.S. Department of Agriculture after the close of
futures trading rated the U.S. spring wheat crop at 34 percent
good to excellent, down 1 percentage point from a week ago and
matching analyst expectations.

Good-to-excellent ratings for the U.S. corn and soy crops
also eased by 1 percentage point, to 64 percent and 61 percent
respectively, matching expectations.

Both corn and soybean futures finished
narrowly lower after prices rose at times earlier in the
session. CBOT September corn settled down 1-1/4 cents at
$3.75 per bushel and CBOT August soybeans off 4 cents to
$9.85 per bushel.

"We're in the midst of a weather market," said Top Third Ag
Marketing analyst Mark Gold. "The market is trying to digest the
different forecasts."

Weather in many U.S. growing areas was hot and relatively
dry last week, even as crop-friendly precipitation was forecast
for later this week in the western Midwest and parts of the
northern Plains, agriculture meteorologists said.

However, temperatures were likely to be hot and above-normal
during the next six to 15 days in much of the Midwest and
Plains, potentially stressing crops, the Commodity Weather Group
said in a note to clients.
(Additional reporting by Colin Packham in Sydney and Sybille de
La Hamaide in Paris; Editing by Tom Brown)

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