GRAINS-Wheat falls 1 pct as rain forecast in parched U.S. Plains

* Cautious trade ahead of USDA sowings, stocks reports

* Wheat still near highest level since June

(Adds analyst comments, updates prices; changes byline, dateline, previously HAMBURG/SINGAPORE)) CHICAGO, March 26 (Reuters) - U.S. wheat futures fell more than 1 percent on Wednesday and were headed for their second straight session of declines in a selloff sparked by forecasts for rain in parched growing regions in the southern U.S. Plains. Corn futures were narrowly lower on pressure from the steep downturn in wheat while soybeans moved slightly higher as investors squared positions ahead of a quarterly grain stocks report from the U.S. Department of Agriculture that is expected to show razor-thin U.S. supplies of the oilseed. A government report earlier this week showed worsening conditions in southern U.S. Plains wheat states Kansas, Oklahoma and Texas, where dry soil and windy conditions could limited yield potential of the hard red winter wheat crop as it exits dormancy. But light showers this week and forecasts for further precipitation in the coming days pressured wheat prices, which last week jumped to their highest levels since June. "I think that even the discussion of rain could be enough to break this wheat market; it has been a steep ride up," said Joe Vaclavik, president of Standard Grain brokerage in Chicago. "I think this system that is developing over Texas and part of Oklahoma might be part of the reason. The amounts of this particular system this week are supposed to be minimal, but that doesn't mean it could not turn into something bigger," he added. Chicago Board of Trade May wheat was down 11-1/4 cents, or 1.6 percent, at $6.97 per bushel as of 11:09 a.m. CDT (1709 GMT). Corn futures for May delivery were down 2-3/4 cents at $4.83-3/4 per bushel while CBOT May soybeans gained 4 cents to $14.32. In addition to the quarterly grain stocks report, USDA on Monday will also estimate spring plantings for corn and soybeans. The two reports typically result in big swings in prices and traders were evening their books ahead of the release. "I think the markets are drifting down in advance of the USDA spring planting and stocks estimates on Monday," said Ole Hansen, head of commodity strategy at Saxo Bank. "The spring USDA forecasts are traditionally among those which can cause heavy market volatility, so we are seeing positioning ahead of them." Analysts polled by Reuters expect the USDA to raise its estimates for soybean planted area at the expense of corn.

"Unless we get presented with some additional supporting news from the weather or exports, there is a risk that we could see the markets drift down in advance of the USDA reports on Monday, considering that wheat, corn and soybeans are all currently at somewhat elevated levels," Hansen added.

Prices at 1109 CDT (1608 GMT):

LAST NET PCT YTD CHG CHG PCT CHG CBOT corn 483.75 -2.75 -0.6 14.6 CBOT soy 1,432.00 4.00 0.3 9.1 CBOT meal 467.20 3.50 0.8 6.7 CBOT soyoil 40.62 -0.12 -0.3 4.6 CBOT wheat 697.00 -11.25 -1.6 15.2 CBOT rice 1,539.00 5.50 0.4 -0.8 EU wheat 210.25 -2.75 -1.3 0.6 US crude 99.60 0.41 0.4 1.2 Dow Jones 16,381 13 0.1 -1.2 Gold 1,303.10 -7.34 -0.6 8.1 Euro/dollar 1.3797 -0.0028 -0.2 1.1 Dollar Index 80.0400 0.0960 0.1 0.0 Baltic Freight 1496 -82 -5.2 -34.3

(Additional reporting by Julie Ingwersen in Chicago, Michael Hogan in Hamburg and Naveen Thukral in Singapore; editing by Jane Baird and G Crosse)