GRAINS-Soy hits 6-week high as dryness stresses Argentine crops

* Traders focus on South America weather amid tight crop supply

* Exporters sell U.S. soybeans to top importer China

* Wheat gains as U.S. Plains drought persists

(New throughout, updates prices, market activity, analyst comments) CHICAGO, Jan 30 (Reuters) - U.S. soybean futures climbed to a six-week high on Wednesday with prices underpinned by fears of a drought in major exporter Argentina and new U.S. soybean sales to top buyer China. Corn futures also rose on concerns about crop losses in Argentina, even as U.S. ethanol production slumped to its lowest level since the government started collecting data more than two years ago. "The dry growing conditions are attracting a lot of attention," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. "There is little rain forecasted there for the next two week and they have already gone four weeks without rainfall." Chicago Board of Trade March soybeans soared 1.8 percent to $14.78-1/4 a bushel by 12:40 p.m. CST (1815 GMT). March wheat rose 1.2 percent to $7.86 a bushel, while March corn jumped 1.3 percent to $7.39 a bushel. The global soybean market is counting on huge South American soybean crops in early 2013 to relieve tight world supplies after a drought in the United States in 2012. Argentina, the world's No. 3 exporter of soybeans after the United States and Brazil, is expected to have a record harvest this season. But crop forecasts depend on February being a lot wetter than January. Crop forecaster Lanworth on Wednesday lowered its forecast for corn and soybean production in Argentina due to dryness. German analysts Oil World on Tuesday warned that delays or weather damage to harvests in Argentina and Brazil could push soybean futures up sharply in coming weeks. "The biggest thing is the uncertainty of the South American weather," said Dax Wedemeyer, broker for U.S. Commodities. He said that forecasts show "that things might be trending just a slight bit drier in some areas."

CHINA DEMANDS Strong demand from China is keeping pressure on global soy supplies. Private exporters struck deals to sell 175,000 tonnes of U.S. soybeans to China for delivery in the next marketing year, the U.S. Department of Agriculture said on Wednesday. It was the second sale this week to China that called for delivery during the 2013/14 marketing year, which opens on Sept 1. On Monday, exporters reported the sale of 220,000 tonnes of U.S. soybeans to China for 2013/14 delivery. The Brazil harvest may not be as large as expected due to heavy rainfall during the past two weeks and drought in frontier agriculture areas of the northeast, according to El Tejar Ltd, the world's largest grain producer.

The farm giant's commercial director for Brazil, Ivan Konig, said in an interview that he expects a harvest of 80 million to 81 million tonnes, undercutting the Brazilian government's official view of 82.7 million tonnes.

ETHANOL SLUMP In the United States, persistent dryness across the Plains helped support wheat futures. Conditions for the winter wheat crop worsened in January as the drought in that major production region showed no signs of ending, according to reports by the U.S. Agriculture Department's National Agricultural Statistics Service. For corn, U.S. ethanol production has sagged as poor demand and high costs have prompted a series of plant closings. Ethanol output fell to 770,0000 barrels per day in the week ended Jan. 25, down 22,000 barrels from the previous week, the Energy Information Administration said. That compares to output of 939,000 bpd a year ago and 908,000 bpd two years ago.

Prices at 12:39 p.m. CST (1839 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 738.25 8.75 1.2% 5.7% CBOT soy 1478.25 26.50 1.8% 4.2% CBOT meal 432.50 8.80 2.1% 2.8% CBOT soyoil 52.53 0.83 1.6% 6.9% CBOT wheat 785.50 8.50 1.1% 1.0% CBOT rice 1546.00 -6.50 -0.4% 4.0% EU wheat 248.00 0.50 0.2% -0.9%US crude 97.50 -0.06 -0.1% 6.2% Dow Jones 13,955 0 0.0% 6.5% Gold 1680.01 16.56 1.0% 0.3% Euro/dollar 1.3569 0.0078 0.6% 2.8% Dollar Index 79.2710 -0.2930 -0.4% -0.6% Baltic Freight 767 -12 -1.5% 9.7%

(Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Louise Ireland, Grant McCool and David Gregorio)