GRAINS-Corn sinks to contract lows on strong US crop conditions

By Karl Plume

CHICAGO, July 1 (Reuters) - U.S. corn futures fell to contract lows on Tuesday as more favorable crop conditions than expected bolstered production prospects in the United States and reinforced expectations of ample supplies of the cereal.

Soybeans eased along with corn as steady but still-strong U.S. crop conditions and good Midwest crop weather weighed on the market, while U.S. wheat futures gained in a technical and short-covering rebound after recent losses.

Traders remain focused on Midwest weather as warm temperatures and timely rains have boosted yield prospects as the corn crop is entering its critical pollination stage of development.

Good crop weather this spring allowed U.S. farmers to stick to their seeding plans as the U.S. Department of Agriculture reported only slight changes to planted area in its closely followed acreage report on Monday.

The agency surprised the market with stronger-than-anticipated corn crop conditions that were the best since 2018 for this point in the growing season. The USDA left soy crop conditions unchanged at the second-highest level in the past five seasons.

Position-squaring ahead of the long U.S. Independence Day holiday weekend helped to pare losses.

"We started the day heavy on crop conditions, but we've been kind of coming back a bit. Crop conditions are great, but that can change and there's warm temperatures right now," said Ted Seifried, chief market strategist for Zaner Ag Hedge.

Benchmark September Chicago Board of Trade corn CU25 was down 4-3/4 cents at $4.04-1/2 a bushel at 11:50 a.m. CDT (1650 GMT) after hitting a contract low of $4.00-1/4 early in the session. New-crop December futures CZ25 were 5 cents lower at $4.20-1/2, after also posting a life-of-contract low.

CBOT August soybeans SQ25 were down 1 cent at $10.28-3/4 a bushel. New-crop November futures SX25 bounced from earlier lows and were unchanged at $10.27.

CBOT September wheat WU25 was up 6-3/4 cents at $5.45 a bushel after falling in six of the past seven trading sessions.