GRAINS-Corn rebounds from contract lows on short covering, bargain buying

By Tom Polansek

CHICAGO, July 14 (Reuters) - Bargain buying and short covering lifted U.S. corn futures on Monday after the market slid to contract lows on expectations for strong U.S. output, traders said.

Soybean futures fell to a three-month low in the most-active contract Sv1 before finishing nearly unchanged.

"You can only sell stuff off for so long without getting some sort of a bounce," said Sherman Newlin, an analyst with Risk Management Commodities.

Most-active corn futures Cv1 closed up 5-3/4 cents at $4.18 a bushel at the Chicago Board of Trade, and soybeans Sv1 ended 1/4 cent lower at $10.07 a bushel. CBOT wheat futures Wv1 finished down 3-1/2 cents at $5.41-1/2 per bushel and touched the lowest price since July 1.

Favorable U.S. weather conditions have hung over the corn and soy markets and fueled expectations for bumper autumn harvests. Commodity Weather Group said rain this week will reduce dryness in the important Midwest region.

After trading ended, the U.S. Department of Agriculture said 70% of the nation's soybean crop was rated good or excellent, up 4 percentage points from a week ago. That topped analysts' estimates for 67%.

The USDA rated 74% of the corn crop as good or excellent, unchanged from a week earlier and in line with estimates.

"For corn, in particular, there have been a lot of yield models out there that have been projecting some pretty hefty numbers," Newlin said.

"I think the trade has already digested that and has priced that in for the time being."

Traders were monitoring U.S. President Donald Trump's tariff threats amid worries that importers may retaliate by limiting purchases of American farm goods.

China, the world's biggest soybean buyer, imported record volumes of soy for the month of June, a Reuters calculation of customs data showed, driven by a surge in shipments from top supplier Brazil.

On Tuesday, the National Oilseed Processors Association is expected to report the U.S. soybean crush data in June dropped to a four-month low, analysts said. It would still be the largest June crush on record, following an expansion of U.S. soy processing capacity.