GRAINS-Wheat falls 2 pct to 7-month low on wetter U.S. weather

* Snow and rain ease concerns about U.S. red winter wheat

* Outlook for corn prices bearish

* Soybeans ease to nearly 3-week low

(Updates with midday prices and analyst's comment on corn) WINNIPEG, Manitoba, Feb 12 (Reuters) - Chicago wheat prices fell to a seven-month low on Tuesday after much needed precipitation provided some moisture to the drought-stricken winter-wheat growing area of the United States. Corn also slipped, on course to extend its losing streak to the longest since mid-2007, on a potential rebound in world grain supply this year, and soybeans turned weaker. Snow and rain showers were moving across the U.S. Southwest Plains, which will help but not eliminate the harmful impact on wheat production from the worst drought in more than 50 years, U.S. agricultural meteorologist Don Keeney of MDA EarthSat Weather said. "The market's breaking lower with an increasing chance of rain in some of these dry areas," said Don Roose, president of Iowa-based U.S. Commodities. Pressure from improving weather outweighed support from a cut to U.S. wheat stocks in U.S. Department of Agriculture data on Friday. Chicago Board of Trade March wheat dropped 14-1/2 cents or 2 percent to $7.27 a bushel by at 12:20 p.m. CST (1820 GMT). It dipped as low as $7.25-1/2, the lowest nearby price since June 29. Australia, the world's second-largest wheat exporter, also slightly raised its production forecast for the current marketing year from its December estimate, after the crop largely escaped damage from a heat wave and floods this summer.

The needed moisture for U.S. wheat crops came as the expectations of large corn and soybean harvests in South America were already weighing on grain markets. "The most obvious reason behind (the fall in prices of) wheat is some improvement in weather conditions in the U.S. where many people were expecting a good deal of damage to the red winter crop due to the dry winter," said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm. March corn fell 9-1/4 cents or 1.3 percent to $6.93 a bushel. It earlier fell to $6.91-1/2 a bushel, its lowest level since Jan. 11. Corn was on course for its eighth straight loss, which would be its longest losing streak in 5-1/2 years. "This market is fully realizing that yes, the supply problem will be taken care of with the fall harvest," said Rich Nelson, chief strategist at Allendale Inc, but cautioned that last year also shaped up as a record year before drought devastated crops. The market will look to fresh planting estimates from the USDA at its annual forum late next week. The acreage estimates could be even larger than the USDA's baseline projections released on Monday, Nelson said. "We have a string of big-picture news that is a little bearish and will weigh on the market throughout this month." The USDA projects U.S. corn output to rise 34 percent to a record 14.4 billion bushels this year, assuming a return to normal weather and yields after droughts stunted output in 2012. March soybeans lost 12-3/4 cents or 0.9 percent to $14.18-3/4 a bushel, giving up earlier gains and touching the lowest nearby price since Jan. 24. "(Corn) bled through $7, and never really recovered from that. That negated all the strength in the soybeans," said Sterling Smith, futures specialist with Citigroup. "Corn is king, and what corn does is going to drive other things." Soybeans were also hampered by the closure of Chinese markets this week for Lunar New Year and a holiday in Brazil, Smith said. "There is no reason for anyone to be bullish right at these price levels, at this moment in time," he said. On Friday, the U.S. Department of Agriculture cut its U.S. soybean end-of-season stocks forecast to 125 million bushels, below the market consensus. But prospects for large South American crops caused Goldman Sachs on Monday to cut its price forecasts for both corn and soybeans. The investment bank also lowered its outlook for wheat prices due to low demand for U.S. exports.

Prices at 12:20 p.m. CST (1820 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 693.00 -9.25 -1.3% -0.8% CBOT soy 1418.75 -12.75 -0.9% 0.0% CBOT meal 409.10 -3.90 -0.9% -2.7% CBOT soyoil 51.02 -0.22 -0.4% 3.8% CBOT wheat 727.00 -14.50 -2.0% -6.6% CBOT rice 1569.00 -15.50 -1.0% 5.6% EU wheat 241.75 -4.50 -1.8% -3.4%US crude 97.55 0.52 0.5% 6.2% Dow Jones 14,023 52 0.4% 7.0% Gold 1648.81 1.16 0.1% -1.5% Euro/dollar 1.3454 0.0048 0.4% 2.0% #VALUE! Baltic Freight 747 1 0.1% 6.9%

(Additional reporting by Julie Ingwersen in Chicago, Natalie Huet in London, Mayank Bhardwaj in New Delhi, Gus Trompiz in Paris; Editing by Jason Neely, Grant McCool and Sofina Mirza-Reid)