GRAINS-U.S. prices rise again in thin pre-holiday trade

* U.S. soy up 0.6 pct, corn gains 0.3 pct, wheat adds 0.2 pct

* Bargain buying supports soybeans, corn after last week's losses

* Mild spillover pressure from higher dollar, weaker stocks

(Adds analyst's comment and closing prices) WINNIPEG, Manitoba, Dec 24 (Reuters) - U.S. grains edged higher on Monday in thin trading before the Christmas holiday, notching their second straight gains in a modest recovery from the previous week's sharp losses. Chicago soybeans were underpinned by bargain hunting after prices slid to a one-month low last week, and by technical buying. Corn futures gained on expectations of a rebound in demand for U.S. supplies, after dropping last week to their lowest level since early July. while wheat was firm on concerns that dry weather was hurting the U.S. winter crop. Outside markets kept a lid on gains, said Rich Nelson, chief strategist with Allendale Inc. Stock markets traded slightly lower due to worries about the U.S. fiscal cliff budget crisis, while the U.S. dollar picked up strength.

Chicago January soybeans rose 9 cents, or 0.6 percent, to $14.39-3/4 a bushel. Last week, the contract closed down more than 4 percent, its steepest weekly decline since mid-November. The soybean market has been weighed down by signs of weakening demand from China, the world's top importer, which canceled U.S. cargoes, hoping for cheaper supplies from South America early next year. "It is a bit of a rebound from oversold levels after the market got spooked agricultural strategist at ANZ in Singapore. The weather in Brazil's soybean areas has generally been favourable for the crop, and the harvest is expected to kick off by early January, according to agronomists. Corn for March delivery gained 2-1/4 cents, or 0.3 percent, to $7.04-1/4 a bushel, on bargain-buying. The front-month corn contract last week dropped to its lowest since early July on softer demand for U.S. cargoes. A forecast for the biggest U.S. corn acreage since 1936 from closely watched private analytics firm Informa Economics also dragged down prices. "The U.S. hasn't been competitive in the corn export market, but around $7 a bushel it starts getting competitive again," Thianpiriya said. March wheat added 1-3/4 cents, or 0.2 percent, to $7.93-3/4 a bushel, on short-covering. The wheat market was underpinned by concerns that drought would curb the U.S. winter wheat crop. The first major snowstorm of winter did little to ease the drought, which is the worst in more than 50 years in the crop-growing U.S. Central Plains and Midwest. Traders were also digesting news Friday from the Commodity Futures Trading Commission that large speculators had increased their net short position in CBOT wheat to the largest level since May. Such a large short position looked bullish for wheat if weather conditions worsen and prompt investors to cover some shorts, Zuzolo said. Argentina's Agriculture Ministry has cut its estimate for 2012/13 wheat production by 5 percent to 10.5 million tonnes, which is still higher than leading private forecasts but reflects damage caused by wet weather.

Trading in Chicago grains ended two hours earlier than usual on Christmas Eve. Traders said they would be watching for results later in the day of voting offer by grain shippers. A possible labor clash at the second-biggest grain-exporting region in the U.S. has fueled speculation that shippers might lock out union members and keep the grain terminals operating with replacement workers.

Prices at 12:24 p.m. CST (1824 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 704.25 2.25 0.3% 8.9% CBOT soy 1439.75 9.00 0.6% 20.1% CBOT meal 434.80 1.00 0.2% 40.5% CBOT soyoil 48.94 0.23 0.5% -6.0% CBOT wheat 793.75 1.75 0.2% 21.6% CBOT rice 1535.00 14.50 1.0% 5.1% EU wheat 255.25 0.75 0.3% 26.0%US crude 88.63 -0.03 0.0% -10.3% Dow Jones 13,139 -52 -0.4% 7.5% Gold 1658.69 2.60 0.2% 6.1% Euro/dollar 1.3185 -0.0002 0.0% 1.9% Dollar Index 79.6540 0.0370 0.1% -0.7% Baltic Freight 699 -1 -0.1% -59.8%

(Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Valerie Parent in Paris and Naveen Thukral in Singapore; Editing by John Wallace and Grant McCool)