GRAINS-U.S. soy falls to 2-month low on good crop outlook
* Favourable crop weather weakens corn, soy prices
* Slowing demand for old-crop soy also weighs
* November Paris wheat futures set contract low
(Adds quotes, updates prices)
LONDON, July 25 (Reuters) - U.S. old-crop soybeans fell to the weakest level in more than two months on Thursday while corn and wheat hovered just above lows set earlier in the week as an improving crop outlook kept markets on the defensive.
"U.S. weather is excellent for corn and soybeans," said Joyce Liu, an investment analyst at Phillip Futures in Singapore. "I think the weather will continue to dominate corn and soybean futures until the end of August."
The increasing likelihood of bumper crops later this year has prompted soy processors and livestock producers to hold off making purchases until cheaper new crop supplies are available.
"U.S. demand is pretty weak as processors are waiting for new-crop supply," Liu said.
Chicago Board of Trade August soybeans was off 1.8 percent at $13.68 a bushel at 1119 GMT after touching $13.63-1/4, the lowest level for the contract since May 17.
New-crop December corn fell 0.05 percent to $4.80 a bushel, hovering above Wednesday's low of $4.79-1/2 a bushel which was the weakest level for the contract in 2-1/2 years.
The outlook for the U.S. soy and corn harvests is favourable, with cooler temperatures and light rain over the next week to 10 days expected to boost crops, according to World Weather Inc.
The beneficial conditions are arriving just as corn is pollinating, the most important period of development for determining the size of the harvest.
"New crop corn prices have continued their move lower, with the previously held weather risk premium leaking from values earlier than we had expected and perhaps too quickly for this stage of the season," Rabobank said in a market update.
Wheat prices were holding around contract lows with a generally favourable outlook for Northern Hemisphere crops keeping the market on the defensive.
CBOT September wheat rose 0.2 percent to $6.54-1/2 a bushel but remained in striking distance of Tuesday's contract low of $6.50-1/2.
"We expect the trajectory for global wheat prices to remain sideways to lower over coming months," Rabobank said in the report, noting significant production increases in the Black Sea region, Europe and Canada.
"Large increases in exportable wheat surpluses in the Black Sea region... are forecast to result in very aggressive pricing, which is likely to dominate world wheat trade over the coming months," the report added.
November milling wheat in Paris fell 0.25 euros or 0.1 percent to 190.00 euros a tonne after setting a contract low of 189.25 euros earlier in the session.
(Additional reporting by Naveen Thukral in Singapore; editing by James Jukwey)