GRAINS-Corn and soy futures fall on beneficial US crop weather

By Tom Polansek

CHICAGO, July 7 (Reuters) - Chicago Board of Trade grain and soybean futures slid on Monday on forecasts for favorable U.S. crop weather, traders said.

They said grain markets also weakened after U.S. President Donald Trump did not announce a trade agreement with China, as some traders had expected before markets closed for the Independence Day holiday on Friday.

Grain futures jumped last week as traders adjusted positions in case the U.S. weather outlook turned hotter or drier over the long weekend, or Trump made an announcement on trade at a speech in Iowa.

Instead, rain benefited the U.S. Plains and western Midwest, and boosted soil moisture in Iowa, according to weather firm Vaisala. Temperatures will be near normal in most areas this week, the firm said, favoring corn crops during the critical pollination period of development.

"You continue to have a non-threatening weather outlook," said Matt Wiegand, commodity broker for FuturesOne.

Most-active CBOT soybean futures Sv1 dropped 29 cents to $10.20-1/4 per bushel by 11 a.m. CDT (1600 GMT), while corn futures Cv1 fell 13-1/4 cents to $4.23-3/4 per bushel. Wheat futures Wv1 declined 9-1/4 cents to $5.47-1/2 per bushel.

Traders were concerned about the uncertain outcome of trade talks between the United States and key trading partners, particularly top soybean-importer China.

Washington is close to finalising several trade agreements in the coming days and will notify other countries of higher tariff rates by July 9, Trump said on Sunday. MKTS/GLOB

CBOT soybean futures retreated after rallying last Wednesday ahead of Trump's speech in Iowa on Thursday.

"The end of last week, the trade heard rumors that China was stepping back into U.S. ag markets," brokerage CHS Hedging said in a note on Monday. "Headlines of that are cold this morning."

The U.S. Department of Agriculture said exporters sold 135,000 metric tons of U.S. corn to Mexico. The agency is slated to issue an update on U.S. corn and soy crop ratings and on wheat harvesting in a weekly report at 3 p.m. CDT.

In Russia, the world's largest wheat exporter, wheat exports are expected to get a boost following a fall in an export tax to zero.