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GRAINS-Corn edges lower as traders ready for USDA report

* USDA expected to lower production estimate

* Dry weather expected to continue - threatening corn

* Wheat edges lower, soybeans tick up

SYDNEY, Aug 10 (Reuters) - U.S. corn edged lower on Thursday as traders readied for a widely watched U.S. Department of Agriculture report that is anticipated to show lower production as a result of recent dry weather. Wheat fell, giving back nearly half the gains from the previous session, while soybeans edged higher. The most active corn futures on the Chicago Board Of Trade fell 0.2 percent to $3.85-1/2 a bushel by 0257 GMT, having gained 0.7 percent in the previous session. Analysts said the USDA's first assessment of the 2017 corn crop later in the session will drive market sentiment, at least in the short-term. "The market is looking for the USDA to cut corn supply estimates in tonight's report. Should it match those expectations, then that might provide the market some support," said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia. "Nonetheless, the USDA report on this occasion is likely to be seen as minor skirmish in a larger battle. U.S. Midwest weather is that larger battle." Analysts expect the USDA to lower its estimate for U.S. corn production to 166 bushels per acre (bpa), from 170.7 bpa as recent dry weather crimps production. The unfavorable weather is expected to continue, with models calling for dry weather across key producing regions for the rest of the month. The most active soybean futures were up 0.1 percent to $9.74-1/2 a bushel, having closed little changed on Wednesday. The most active wheat futures were down 0.3 percent to $4.58 a bushel, having closed up 0.5 percent on Wednesday. Traders said soybeans were also under pressure from the USDA report. Analysts expect the USDA to peg U.S. yields at 47.5 bpa, compared with the USDA's trend-based forecast of 48.0 bpa. USDA said private exporters canceled a sale of 130,000 tonnes of U.S. old-crop soybeans to unknown destinations.

Grains prices at 0257 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 458.00 -1.50 -0.33% +0.22% 497.98 35 CBOT corn 385.50 -0.75 -0.19% +0.46% 391.26 51 CBOT soy 974.50 1.25 +0.13% +0.13% 994.13 45 CBOT rice 12.23 -$0.09 -0.69% +0.66% $12.08 51 WTI crude 49.53 -$0.03 -0.06% +0.73% $47.32 62

Currencies

Euro/dlr $1.175 -$0.001 -0.09% -0.03% USD/AUD 0.7883 0.000 -0.04% -0.37%

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

(Reporting by Colin Packham; Editing by Amrutha Gayathri)