GRAINS-Corn, soy prices climb as U.S. crop outlook deteriorates

* Weak dollar helps underpin U.S. grain and soy prices

* U.S. corn, soy crop ratings well below year ago levels (Adds quotes, updates prices)

LONDON, July 19 (Reuters) - U.S. corn and soybean futures were higher on Wednesday, boosted by fears that hot, dry weather in parts of the Midwest could curb production in the key producing region.

Wheat prices showed more modest gains, supported partly by the gains in corn and soybeans.

The most active corn futures on the Chicago Board Of Trade were up 1.6 percent at $3.97 a bushel by 1016 GMT.

Dealers said the weather was expected to be hot in the U.S. corn belt and although rains are forecast for some areas, they may be patchy.

"Corn and soybean prices are climbing in a market driven by weather forecasts where temperatures are expected to rise slightly from the seasonal average," analysts Agritel said in a market note on Wednesday.

"Several corn belt areas should not benefit from new rainfall in the coming weeks. This situation therefore reinforces the fears associated with a further deterioration of crops, especially during the flowering period."

The condition of the U.S. corn crop has been deteriorating.

The U.S. Department of Agriculture earlier this week said 64 percent of U.S. corn was rated good or excellent, down from 65 percent a week earlier and 76 percent a year ago.

The most active soybean futures on the Chicago Board of Trade were up 0.5 percent at $10.07 a bushel.

"Like corn, the soybean market is weather watching," said analyst Tobin Gorey of Commonwealth Bank of Australia.

Soybean crop conditions have also declined.

The USDA has reported that 61 percent of the soybean crop is in good or excellent condition, down from 71 percent a year ago.

The most active CBOT wheat futures were up 0.35 percent at $5.05-1/2 a bushel, while December wheat futures on Euronext were up 0.1 percent at 179.50 euros a tonne.

Dealers said the weakness of the dollar had underpinned U.S. prices but was making it more difficult for EU exporters.

"This is making European wheat suppliers less competitive," Commerzbank said in a market note.

The U.S. dollar was hovering near a 10-month low against a basket of currencies on Wednesday. (Additional reporting by Colin Packham in Sydney; Editing by Christian Schmollinger and David Evans)