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GRAINS-Wheat falls nearly 2 percent to hit two-week low

SYDNEY, July 13 (Reuters) - U.S. wheat fell nearly 2 percent on Thursday to hit a two-week low as prices came under pressure from the U.S. Department of Agriculture's surprising increase to end of season U.S. supplies.

FUNDAMENTALS

* The most active wheat futures on the Chicago Board Of Trade were trading down 1.8 percent at $5.27-1/2 a bushel 0033 GMT, near the session low of $5.27-1/4 a bushel - the lowest since June 30. Wheat closed down 2.9 percent on Wednesday.

* The most active soybean futures were down 1.1 percent at $10.22-3/4 a bushel, near the session low of $10.18-1/2 a bushel - the lowest since July 7. Soybeans closed down 0.9 percent on Wednesday.

* The most active corn futures fell 0.8 percent to $3.95-3/4 a bushel, near the session low of $3.95-1/4 a bushel, the lowest since July 6. Corn slumped 3.7 percent in the previous session.

* The USDA in a monthly report raised its forecast of U.S. wheat stocks at the end of the 2017/18 marketing year to 938 million bushels, from 924 million in June, bucking most trade expectations for a decline.

* The USDA also raised its forecasts of end 2017/18 U.S. corn stocks to 2.325 billion bushels, up from 2.110 billion in June and above an average of analyst estimates for 2.181 billion.

* The USDA left its U.S. 2017 corn yield forecast unchanged at 170.7 bushels per acre. Some analysts had expected a reduction due to stressful hot and dry conditions in parts of the Midwest.

* The USDA lowered its soy ending stocks forecasts for both the 2016/17 and 2017/18 marketing years.

* Welcome rains over the last two days in Iowa and Illinois, the top two producers of corn and soybeans, also pressured futures, along with updated midday forecast models calling for milder conditions in the Midwest.

MARKET NEWS

* The dollar eased against the yen on Wednesday, after Federal Reserve Chair Janet Yellen said interest rates hikes would be gradual and that the U.S. central bank may not be able to raise rates by "all that much."

* Oil futures rose, maintaining some gains from earlier in the day, as a report showing hefty drawdowns in U.S. crude inventories was offset by data pointing to lackluster gasoline demand.

* The Dow rose to a record high close while U.S. stocks kept their upward momentum Wednesday following Federal Reserve Chair Janet Yellen's congressional testimony to gradually raise interest rates.

DATA AHEAD (GMT)

China Foreign direct investment June China M2 money supply June China New yuan loans June 0830 U.K. Jobless rate (ILO) May 0900 Euro zone Industry output May 1100 U.S. Home mortgage applications weekly

Grains prices at 0033 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 527.50 -9.50 -1.77% -4.61% 489.30 62 CBOT corn 395.75 -3.00 -0.75% -4.47% 397.56 46 CBOT soy 1022.75 -11.25 -1.09% -1.97% 955.89 83 CBOT rice 11.89 $0.05 +0.46% -1.49% $11.68 53 WTI crude 45.32 -$0.17 -0.37% +0.62% $45.22 53

Currencies

Euro/dlr $1.142 $0.001 +0.12% -0.36% USD/AUD 0.7685 0.001 +0.13% +0.67%

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

(Reporting by Colin Packham; Editing by Richard Pullin)