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GRAINS-Corn prices fall despite fears over hot, dry U.S. weather

* Corn prices drop from one-year high

* Soybeans fall for first time in eight sessions

* Wheat edges lower despite hot weather

SYDNEY, July 12 (Reuters) - U.S. corn on Wednesday retreated from a one-year high touched in the previous session as traders squared positions ahead of a widely watched U.S. government report, though losses were checked as dry U.S. weather stoked fears of production losses. Soybeans fell for the first time in eight sessions as prices edged down from a four-month peak, while wheat also declined. The most active corn futures on the Chicago Board of Trade dropped 0.66 percent to $4.11-1/2 a bushel after closing down 0.1 percent in the previous session. Corn on Tuesday hit its highest since June 2016 at $4.17-1/4 a bushel. The fall in prices comes as traders ready for a widely watched U.S. Department of Agriculture report later in the session. But analysts said fears of production losses as a result of continued hot, dry weather across key growing regions provided a floor to prices. "July is a key development month for corn, so the timing makes prices acutely sensitive to hot weather during this period," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia. "Some weather models are disastrous." Despite some scattered showers early on Tuesday across parts of Iowa and Illinois, the top U.S. corn states, forecasts call for continued hot, dry weather over the rest of the week during a key phase for determining yields. The most active wheat futures dropped 0.5 percent to $5.50-1/2 a bushel, having closed down 0.2 percent on Tuesday. The most active soybean futures declined 0.4 percent to $10.39 a bushel. Soybeans firmed 0.4 percent on Tuesday, when they marked their strongest since March 6 at $10.47 a bushel. The decline comes despite continued fears of production losses in the United States from the recent dry weather. The USDA on Monday rated 62 percent of the U.S. soybean crop in good-to-excellent condition, down from 64 percent the previous week and below an average of analyst expectations. Analysts already expect the USDA to lower its forecasts of U.S. soybean ending stocks for the 2016-17 and 2017-18 marketing years, and cut its estimate of U.S. 2017-18 total wheat production.

Grains prices at 0227 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 550.50 -2.50 -0.45% +0.09% 486.99 74 CBOT corn 411.50 -2.75 -0.66% -0.78% 397.95 71 CBOT soy 1039.00 -4.25 -0.41% -0.02% 952.81 91 CBOT rice 12.04 -$0.03 -0.25% +0.12% $11.67 78 WTI crude 45.76 $0.72 +1.60% +3.06% $45.33 57

Currencies

Euro/dlr $1.148 $0.002 +0.15% +0.73% USD/AUD 0.7661 0.003 +0.35% +0.74%

Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight RSI 14, exponential

(Reporting by Colin Packham; Editing by Joseph Radford)