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GRAINS-Soybean futures weaken on U.S. demand concerns

* Economic uncertainty hangs over grain markets

* Competition from Argentine soy adds pressure

* Traders eye favorable U.S. harvest weather (Adds latest prices, analyst comment; changes byline/dateline)

By Tom Polansek

CHICAGO, Sept 16 (Reuters) - Chicago Board of Trade soybean futures stumbled on Friday as exports from Argentina and warnings of a global recession raised concerns about demand for U.S. supplies, analysts said.

Corn futures were little unchanged, while wheat futures advanced.

Traders focused on demand for crops, after the U.S. Department of Agriculture updated its domestic production estimates in a monthly report issued on Monday.

"While we've answered a lot of the supply-side questions, now we have a ton of demand-side questions," said Ted Seifried, chief market strategist of Zaner Ag.

In Argentina, the world's top exporter of soy oil and meal and the No. 3 for raw beans, farmers increased sales of soybeans after the government implemented a more favorable exchange rate for exports of the cash crop. Until last month, local farmers were holding onto more soybeans than usual due to Argentina's uncertain economic environment.

"Competition from South American supplies continues to put pressure on U.S. soybean exports," analysts at Zhongzhou Futures in China said.

Most-active CBOT soybean futures were down 5-1/2 cents at $14.46 a bushel by 12:15 p.m. CDT (1715 GMT). Corn was up 1/4-cent at $6.77-3/4 a bushel, while wheat rose 14 cents to $8.59 a bushel.

Trading was choppy as Wall Street's main indexes hit near two-month lows and investors weighed tighter U.S. grain inventories against uncertainty over demand.

"We're trying to juggle the idea of tighter-than-expected balance sheets, especially in soybeans," Seifried said. "We're kind of caught in between."

Next week, investors will wait for a U.S. Federal Reserve policy decision where the central bank is expected to deliver a hefty interest rate hike even as it risks tipping the economy into a recession.

Traders will also monitor the pace of the U.S. corn and soy harvests, which are generally benefiting from warm, dry weather. In the southern Delta region, showers are not enough to hamper harvesting, Commodity Weather Group said.

(Reporting by Tom Polansek in Chicago, Gus Trompiz in Paris and Enrico Dela Cruz in Manila; Editing by Neha Arora, Uttaresh.V, Vinay Dwivedi and Diane Craft)

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