GRAINS-U.S. corn down for 3rd session, hits nine-month low

* Corn retreats after early short-covering rally fizzles

* Buyers wary of further fund long liquidation in corn

* Soybeans turn down, led by new-crop November

* Wheat firm on short-covering; MGEX wheat leads gains

(New throughout, updates prices, market activity, comments from analysts) CHICAGO, April 2 (Reuters) - Corn prices fell on Tuesday for a third straight session, touching a nine-month low, as funds kept liquidating positions after the U.S. government reported last week that stockpiles were much larger than expected. Soybeans slid, led by corn, while wheat clung to modest gains, recovering some ground lost in the slump that followed Thursday's stocks report by the U.S. Department of Agriculture. At the Chicago Board of Trade as of 12:30 p.m. CDT (1730 GMT), May corn was down 6-3/4 cents at $6.35-1/2 per bushel and May soybeans down 2-3/4 cents at $13.88 a bushel. May wheat was up 3-1/4 cents at $6.67-1/4 a bushel. Corn sagged after an early relief rally fizzled. "Traders are cautious and uncertain whether the fund liquidation that has been pressing the market lower is complete," said Shawn McCambridge, grains analyst with Jefferies Bache in Chicago. "We've nailed this market so hard but could not generate much follow-through buying," McCambridge added. The market was still digesting USDA's stocks figures. The government on Thursday reported U.S. corn stocks as of March 1 at 5.4 billion bushels, well above the average analyst estimate for about 5 billion. Stocks of soybeans and wheat also came in above expectations, and the USDA said farmers would plant the most acres to corn since 1936. CBOT corn prices have fallen nearly $1 a bushel, or 13 percent, since the USDA reports were released. The drop in CBOT corn prices during Thursday and Monday totaled 12.6 percent, the biggest two-day decline in data dating back to 1959, an exchange spokesman said. Funds have been aggressive sellers, selling an estimated 75,000 corn contracts during those two sessions. Yet open interest in CBOT corn showed little change since before USDA's report. Open interest rose by more 16,000 contracts, or 1.2 percent, during Thursday's sell-off and fell "That tells me there are some longs hanging in the market," said Ken Smithmier, analyst with the Hightower Report in Chicago. When the sell-off in corn will end is anybody's guess, but signs should emerge from a rise in demand in the cash market, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. "You are going to pick up usage on ethanol and on livestock feed," Roose said. "It's about trying to find value. The value is going to come from the end-user, and we will know about it from the basis and the spreads," Roose said.

SOYBEANS LOWER, LED BY NEW-CROP CONTRACTS CBOT soybeans turned lower with the new-crop November contract leading the way down. New-crop soybeans have gained value relative to corn, a factor that could motivate U.S. farmers to switch some corn acres over to soybeans when planting begins in the coming weeks. Also, cold temperatures in the Midwest have kept farmers from getting an early start with planting. Any major weather delays in April and May could favor soybeans, which can be planted later than corn. Prospects for a larger 2013 U.S. soy crop have weighed on prices. Nearby CBOT soybeans have been underpinned by transport bottlenecks in Brazil, where delays in moving the country's likely record-large harvest into export channels have steered some global soy export business to the United States. However, the worst delays are probably over and Brazil's shipments are likely to increase in coming weeks, Hamburg-based oilseeds analysts Oil World said. CBOT wheat bucked the weak trend, drawing support from fund short-covering and worries about crop conditions in the U.S. Plains winter wheat belt. The biggest gains in wheat were in Minneapolis, where MGEX spring wheat futures were supported by a lack of farmer selling and a weekly report showing a drop in the amount of deliverable spring wheat stored in commercial warehouses at the Duluth/Superior terminal.

Prices at 12:32 p.m. CDT (1732 GMT)

LAST NET PCT YTD CHG CHG CHG CBOT corn 635.75 -6.50 -1.0% -9.0% CBOT soy 1388.25 -2.25 -0.2% -2.1% CBOT meal 399.90 1.40 0.4% -4.9% CBOT soyoil 49.54 -0.52 -1.0% 0.8% CBOT wheat 667.25 3.25 0.5% -14.2% CBOT rice 1564.00 37.50 2.5% 5.2% EU wheat 236.75 -2.00 -0.8% -5.4%

(Additional reporting by Nigel Hunt in London and Naveen Thukral in Singapore; Editing by Alison Birrane, Sofina Mirza-Reid and David Gregorio)