GRAINS-Corn edges higher in rebound ahead of major USDA reports

* Traders buy back previously sold positions in corn

* Soybeans struggle to advance amid big Brazil crop forecasts

* USDA: Private exporters report sale of optional-origin soy

(Adds comments, updates prices) CHICAGO, Jan 9 (Reuters) - U.S. corn futures rose on Wednesday as traders evened up positions before the federal government releases major crop reports at the end of the week, while wheat and soybeans sagged. Traders were buying back previously sold positions in the corn market after making money recently on bets that prices would decline. They said Friday's U.S. Department of Agriculture reports on supply-demand and quarterly U.S. grain inventories could change trends in the market. Corn has swung by the maximum daily trading limits six years in a row on the day of the department's January announcements. "Going into a major report, we're trying to rebalance a bit," said Don Roose, president of U.S. Commodities. "It's going to be all about this report that gives us a clue on market direction." Chicago Board of Trade March corn rose 3 cents, or 0.4 percent, to $6.91-3/4 a bushel by 11:45 a.m. Central time (1745 GMT). The market has rebounded slightly since hitting a six-month low on Monday on concerns about sluggish demand. "With the uncertainty that a report brings, a lot of the traders who are short are willing to get out of those positions and get flat," said Brian Hoops, president of Midwest Market Solutions.

COMPETITION WITH BRAZIL Soybean prices weakened on expectations that a record-large harvest in Brazil will reduce demand for the U.S. crop. March soybeans dropped 1/2 cent, or 0.04 percent, to $13.86 a bushel. Brazil, which competes with the United States for export sales, raised its soybean production forecast to a record 82.7 million tonnes, up 0.1 percent from its estimate last month and 24 percent above last year's harvest.

China in recent weeks has cancel led orders for more than one million tonnes of U.S. soybeans as some farmers in Brazil have started harvesting. China is "clearly switching their beans to South America," Roose said. "South America has a big crop coming at us." Private U.S. exporters on Wednesday reported the sale of 120,000 tonnes of optional-origin soybeans to top importer China for delivery next marketing year, according to USDA. Optional-origin sales allow for the commodity to come from the United States or other nations. Hoops said U.S. exporters will likely book South American soybeans for shipment to China, a "telling" sign of the stiff competition for business. On Friday, USDA is expected to raise its forecast for Brazil's soybean harvest by 0.9 percent from last month, to 81.8 million tonnes, according to a Reuters poll. Wheat also weakened, with the March contract sagging 3-1/4 cents, or 0.4 percent, to $7.47-1/4.

GLOBAL DEMAND Corn futures were underpinned by an increase in global demand after a lull in purchase tenders over the holidays and the recent decline in prices, traders said. South Korea's Feed Leaders Committee (FLC) purchased 69,000 tonnes of corn, 55,000 tonnes of feed wheat, and 45,000 tonnes of soymeal in a tender on Wednesday, traders said. South Korea's Major Feedmill Group (MFG) on Tuesday bought 137,000 tonnes of corn for arrival in May, while the Korea Feed Association (KFA) bought 110,000 tonnes of corn likely to be sourced from South America. In addition, a group of private Israeli buyers issued international tenders on Tuesday to purchase 135,000 tonnes of corn and up to 50,000 tonnes of feed wheat.

Prices at 9:51 a.m. CST (1550 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 691.00 2.25 0.3% 6.9% CBOT soy 1420.00 6.25 0.4% 18.5% CBOT meal 410.30 -0.30 -0.1% 32.6% CBOT soyoil 49.34 0.20 0.4% -5.3% CBOT wheat 747.75 -2.75 -0.4% 14.6% CBOT rice .00 0.00 0.0% -100.0% EU wheat 255.50 0.75 0.3% 26.2%US crude 92.87 -0.28 -0.3% -6.0% Dow Jones 13,397 68 0.5% 9.7% Gold 1655.03 -3.57 -0.2% 5.8% Euro/dollar 1.3047 -0.0033 -0.3% 0.8% Dollar Index 80.5930 0.2480 0.3% 0.5% Baltic Freight 743 9 1.2% -57.2%

(Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Alison Birrane, Grant McCool and John Wallace)