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GRAINS-Wheat down 3%, joining broad commods weakness on recession fears

(Updates prices, adds quotes, changes byline, adds dateline)

By Julie Ingwersen

CHICAGO, Sept 23 (Reuters) - U.S. wheat futures fell about 3% on Friday, joining a broad sell-off in commodity and equity markets tied to fears of an economic downturn that would dent demand, analysts said.

Corn and soybean futures joined the weaker trend, pressured by recession fears and the expanding U.S. harvest. Forecasts call for mostly dry weather in the Midwest over the next two weeks as field work picks up.

As of 1:05 p.m. CDT (1805 GMT), Chicago Board of Trade December wheat was down 30-1/2 cents at $8.80-1/4 per bushel, retreating from a two-month high set a day earlier.

CBOT December corn was down 9-1/4 cents at $6.79 a bushel and November soybeans were down 30-3/4 cents at $14.26-1/4 a bushel.

Wall Street equity markets plunged, U.S. crude oil futures dropped nearly 6% and the dollar touched a 22-year high, making U.S. grains less competitive globally, as worries mounted about the health of the world economy.

"Everything is interpreted through the lens of global recession that negatively impacts demand for commodities, leading to the selling as we head into the weekend," StoneX chief commodities economist Arlan Suderman wrote in a client note.

Outlooks for favorable Midwest weather added to bearish sentiment, even though the U.S. Department of Agriculture has projected smaller U.S. corn and soy crops compared to a year ago. The harvest is just beginning in the heart of the Corn Belt, at 7% complete for corn and 3% for soybeans as of Sept. 18.

"Below-normal rainfall is expected across the central U.S. over the next 15 days, which will favor dry-down and early harvesting of corn and soybeans," space technology company Maxar said in a daily weather note.

Traders continue to monitor the conflict in Ukraine. U.S. and European wheat futures markets on Thursday reached their highest levels since July 11, after Moscow's moves to mobilise more troops and back referendums on joining Russia in occupied regions of Ukraine fuelled concern about further disruption to vital Black Sea grain trade.

However, rising estimates of what is expected to be a record Russian wheat harvest and ongoing grain shipments from Ukraine through a Black Sea corridor were tempering supply worries.

"Trade flows are not without disruption risk, but so long as ports and transit lanes are open for grains, then prices should generally stay contained," Citi analysts said in a note. (Additional reporting by Gus Trompiz in Paris and Enrico Dela Cruz in Manila Editing by Kirsten Donovan and Mark Potter)

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