GRAINS-Futures slip as U.S. fiscal cliff nears

* Soy turns lower, but leads 2012 commodity gains

* U.S. wheat extends fall to new six-month low

* Corn down modestly

(Recasts, adds analyst's comment) WINNIPEG, Manitoba, Dec 27 (Reuters) - U.S. grain futures were lower on Thursday as worries about a possible year-end U.S. budget crisis weighed on commodities despite signs of bullish supply-and-demand fundamentals for some crops. Wheat led the way down with the nearby March contract on the Chicago Board of Trade sliding to a near six-month low. Soybeans and corn posted more modest losses. In the wake of President Barack Obama's return to Washington to restart negotiations over the federal budget, U.S. equities and crude oil also traded lower, while the U.S. dollar was up a tad. "The whole commodity world feels this fiscal cliff is going to be deflationary," said Chris Manns, president of Traders Group Inc in Chicago. "It's going to be fewer dollars chasing fewer goods and services if we fall off the fiscal cliff." Chicago soybeans and wheat are, despite big losses this quarter, heading for the biggest yearly gains of the 19 components of the commodities benchmark Reuters Jefferies CRB Index. Both are up about 18 percent on the year, boosted by drought-related production declines in key growing regions. But concerns about the struggling U.S. winter wheat crop and growing-season weather for South American corn and soybean crops are secondary to fears about the fiscal crisis, Manns said, with thin holiday-season trading volumes leaving grain markets vulnerable to quick turns. With the U.S. "fiscal cliff" of spending cuts and tax increases in mind, large speculators have slashed their bullish bets on corn to the smallest level since June and boosted their net short position in Chicago wheat to the highest since May, data from the U.S. Commodity Futures Trading Commission showed last week. Chicago March wheat was down 5-1/4 cents, or 0.7 percent, at $7.69-1/4 a bushel at 11:22 a.m. CST (1722 GMT), after dropping to $7.64-1/2 earlier, the lowest price since early July. "Now you're looking to see if you can get to some (low prices) where U.S. wheat will look more enticing," said Dax Wedemeyer, a broker and analyst at Iowa-based U.S. Commodities. U.S. soft red winter wheat, the type traded at the CBOT, has become the cheapest milling wheat in the world. An absence of fresh export sales, however, has kept a lid on futures prices. Traders were monitoring crop weather in the southern U.S. Plains hard red winter wheat region, where cold temperatures this week raised the threat of crop damage from winterkill. Chicago Board Of Trade January soybeans dipped 5-1/2 cents, or 0.4 percent, to $14.19 a bushel, while March corn shed 3/4 cent to $6.92-1/2 a bushel. Soybeans were underpinned by the USDA's report on Wednesday of sales of 115,000 tonnes of U.S. soybeans to China and 108,000 tonnes to unknown destinations, both for delivery in 2012/13.

The soybean market has been weighed down in recent weeks by forecasts for record production in South America, where crops are experiencing largely favorable weather. The wet areas of Argentina were expected to turn drier in the next two weeks, easing concerns about excess moisture, while welcome rains were forecast later this week and next week for parts of central Brazil. Overall, fundamental conditions of supply and demand are becoming more bullish amid unfavorable dry weather for winter wheat in the southern U.S. Plains and recent soybean purchases said in a note to clients. "I think most people are looking for late January to start revving up (prices) again," Manns said. They're "waiting for the hit, the selloff, and then look for cheap grains, or cheap gold, or cheap anything, to get back into the market again."

Prices at 11:22 a.m. CST (1722 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 692.50 -0.75 -0.1% 7.1% CBOT soy 1419.00 -5.50 -0.4% 18.4% CBOT meal 430.00 -1.30 -0.3% 39.0% CBOT soyoil 48.29 0.00 0.0% -7.3% CBOT wheat 769.25 -5.25 -0.7% 17.8% CBOT rice 1503.00 -12.00 -0.8% 2.9% EU wheat 250.00 -5.50 -2.2% 23.5%US crude 90.43 -0.54 -0.6% -8.5% Dow Jones 13,009 -105 -0.8% 6.5% Gold 1662.46 2.97 0.2% 6.3% Euro/dollar 1.3219 -0.0004 0.0% 2.1% Dollar Index 79.7180 0.0970 0.1% -0.6% Baltic Freight 699 -1 -0.1% -59.8%

(Additional reporting by Sybille de La Hamaide and Valerie Parent in Paris and Naveen Thukral in Singapore; Editing by Anthony Barker and John Wallace)