GRAINS-U.S. soybean futures gain 1 percent, wheat retreats

* Soy hits 3-week high on global demand, weather worries

* Egypt purchase lifts wheat, gains erode on profit taking

* Corn notches modest gain, anchored by poor exports

(Updates with closing prices) CHICAGO, Dec 3 (Reuters) - U.S. soybean futures hit a three-week high on Monday as adverse weather threatened production in Argentina and southern Brazil, two of the world's top suppliers, but prices later slipped on spillover pressure from sinking corn and wheat prices. The first U.S. wheat purchase by Egypt's state buyer since April fueled early gains, but prices turned lower by midday in a profit taking setback and amid concerns that U.S. wheat would still face stiff competition in the global marketplace. Corn closed modestly higher, but well below early peaks, weighed down by profit taking and sluggish exports. A weaker U.S. dollar offered some underlying support to grains markets in general. T he dollar index dipped to a one-month low as signs of progress in tackling Greece's debt lifted the euro, making dollar-denominated grains more attractive to overseas buyers. Soybeans advanced because of traders' concerns that overly wet weather in No. 3 exporter Argentina and persistently dry conditions in southern areas of Brazil, the world's largest supplier after the United States, would trim production at a time when global supplies were uncomfortably tight. "The weather in South America is now front and center. There's been a less-than-ideal start to planting and the market is building back in a weather premium after that really sharp selloff we saw in soybean futures in November," said Brian Basting, commodity research analyst with Advance Trading. Brazil was still expected to harvest a record-large crop next year amid ideal weather in central Brazil, but dryness in the south could limit the crop's potential, analysts said on Monday. Rains in Argentina this week may sustain flooding that has swamped some areas of the grain belt and delayed planting.

STRONG DEMAND Meanwhile, robust demand from top importer China and from domestic U.S. processors, who have seen rising demand for soymeal and soyoil in recent weeks, further supported futures. Karl Setzer, a commodity trading advisor and market analyst with MaxYield Cooperative in West Bend, Iowa, said: "Crush is running high and our exports are high and the United States is the only source right now in the global market." Chicago Board of Trade January soybeans rose 15 cents, or 1 percent, to $14.53-3/4 per bushel, briefly rising above its 200-day moving average of $14.62-1/4 before slipping back. Corn futures eked out the first gain in three sessions, but closed well below the day's highs as sluggish exports limited buying interest. CBOT March futures added 2 cents to $7.54-3/4 a bushel. The U.S. Department of Agriculture on Monday said only 9.6 million bushels of corn were inspected for export last week, just a quarter of the total in the same week a year earlier and season-to-date shipments were only half of last year's pace. "In the first quarter of the marketing year, (corn) shipments were barely 200 million bushels. In a good year we get that in three or four weeks," said Basting, the Advance Trading analyst.

WHEAT TURNS LOWER CBOT March wheat fell 2-3/4 cents, or 0.3 percent, to $8.60-3/4 per bushel after shedding 2.5 percent on Friday. Wheat fell for the third straight session despite U.S. wheat claiming the bulk of a 400,000 tonne purchase by Egyptian government buyer GASC in a weekend tender. The market has anticipated for some time an upturn in U.S. wheat exports after weather-related supply snags in rival exporters like Russia and Argentina, as well as tight stocks in the European Union. Offers in the Egyptian tender showed the U.S. was now matching EU prices, even including higher shipping costs. Still, U.S. wheat exports to date are well behind the normal pace and the world's top wheat exporter will face competition from a large Australian crop in the coming months.

Prices at 2:36 p.m. CST (2036 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 749.00 1.00 0.1% 15.9% CBOT soy 1453.75 15.00 1.0% 21.3% CBOT meal 445.20 2.80 0.6% 43.9% CBOT soyoil 49.90 0.49 1.0% -4.2% CBOT wheat 842.00 -2.75 -0.3% 29.0% CBOT rice 1537.50 10.50 0.7% 5.3% EU wheat 269.00 -0.50 -0.2% 32.8%US crude 88.97 0.06 0.1% -10.0% Dow Jones 12,984 -39 -0.3% 6.3% Gold 1717.11 2.22 0.1% 9.8% Euro/dollar 1.3053 0.0068 0.5% 0.8% Dollar Index 79.8930 -0.2610 -0.3% -0.4% Baltic Freight 1077 -9 -0.8% -38.0%

(Additional reporting by Gus Trompiz and Valerie Parent in Paris, Colin Packham in Sydney; Editing by Marguerita Choy, Nick Zieminski and Grant McCool)