GRAINS-Soybeans rise after USDA sees U.S. crop in poorer state

* Soybeans rise after disappointing USDA U.S. crop ratings

* Condition of soybean crop declines after dry weather

* Corn and wheat dip but still supported

(Recasts with European trade, new comment, changes dateline) HAMBURG, July 25 (Reuters) - U.S. soybeans rose about 1 percent on Tuesday, reversing Monday's decline, after the U.S. Department of Agriculture (USDA) said the U.S. crop was in a worse condition than expected after recent dry weather. Corn continued Monday's weakness with more crop-friendly rain expected in U.S. grain belts while progress with the U.S. harvest weighed on wheat prices. The Chicago Board of Trade most active November soybean

contract was up 1.0 percent at $10.20-1/4 a bushel at 1008

GMT. Soybeans fell 1.2 percent on Monday.

December corn was down 0.1 percent at $3.90 a bushel,

after falling 0.8 percent on Monday. September winter wheat fell 0.1 percent to $4.88-1/4 a bushel after dropping 2.1 percent on Monday to their lowest since June 29. "Soybeans are being supported by the U.S. crop conditions report from the USDA late yesterday which assessed the U.S. soybean crop at below what the market had been expecting following the dry weather," Rabobank senior commodity analyst Graydon Chong said. "This is a critical time for soybean development." "The U.S. weather remains the factor driving markets. Forecasts are looking slightly more beneficial for corn this week which is a weakening factor today, with some cooler weather and perhaps a bit more rain expected to help corn development." The USDA said that 57 percent of the U.S. soybean crop was in good to excellent condition, down from 61 percent last week. Analysts had expected a reading of 60 percent.

After some showers over the weekend, more rain is expected in the U.S. Midwest this week and the summer heat is expected to ease next week. "At this time of year, it is weather forecasts above all which determine what happens on the agricultural markets," Commerzbank said in a note. The prospect of cooler temperatures and some rain in the United States is allaying fears of widespread drought and causing grains prices to fall, Commerzbank said. "Steady progress is being made with the U.S. winter wheat harvest which is now some 84 percent completed, bringing added supplies onto the market which is also adding some downward pressure today," Rabobank's Chong said. "The U.S. spring wheat crop is expected to start in the next couple of weeks following the hot and dry weather which is expected to have caused damage. But both wheat and corn remain well supported and I think both have continued underlying price strength despite some limited selling today."

(Reporting by Michael Hogan; additional reporting by Colin Packham; editing by David Clarke)