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GRAINS-Soy to 3-1/2-week top on technicals, dry U.S. forecast

* Midwest dryness may threaten U.S. soy yield prospects

* Uncertainty about Hurricane Irma's path adds support

* Corn and wheat follow soybeans higher

(Updates with closing U.S. prices, USDA crop progress figures) CHICAGO, Sept 5 (Reuters) - U.S. soybean futures hit a 3-1/2-week high on Tuesday on technical buying and forecasts for dry weather in the Midwest that could threaten late-season yield prospects, analysts said. Corn and wheat futures followed the higher trend. Chicago Board of Trade November soybean futures settled up 19 cents at $9.68-1/2 per bushel after reaching $9.73-1/2, the contract's highest since Aug. 10. CBOT December corn ended up 3-1/4 cents at $3.58-1/2 per bushel and December wheat finished up 4-1/4 cents at $4.43 a bushel. Soybeans led the way up, with the November contract forming a gap on its chart by opening above Friday's high, a bullish technical signal.

"There is a lot of short-covering. Funds came into the week short, and we went above ... resistance, and hit a lot of buy-stops on the way up," said Brian Hoops, analyst with Midwest Market Solutions. Forecasts called for dry weather across much of the Midwest for the next 10 days, potentially stressing the maturing U.S. soybean crop. "The dry weather will favor maturation of the corn crop but may stress soybean filling, especially in Iowa and Illinois," MDA Weather Services said in a note to clients. Illinois and Iowa are the top two soy-producing states. Uncertainty about the path of Hurricane Irma added support. The storm could potentially bring heavy rain to the Southeast next week. "If it (Irma) moves a little bit west, let's say Alabama, it's going to go straight up through the Mississippi (River) Valley and it could cause major flooding in the Southeast and the southern Corn Belt," said Ag Watch Market Advisors President Dewey Strickler. Additional support stemmed from stepped-up export demand from top global soy buyer China. The U.S. Department of Agriculture on Tuesday said private exporters sold 136,000 tonnes of U.S. soybeans to China, following a string of similar sales announcements since mid-August. CBOT corn followed soybeans higher, extending a rebound from contract lows set last week. Cash sales of old-crop corn from farmers have slowed since the start of the month, helping to lift futures, Hoops said. After the CBOT close, the USDA rated 61 percent of the U.S. corn crop in good to excellent condition, down from 62 percent a week earlier. Analysts surveyed by Reuters on average expected no change. The USDA said 12 percent of the corn crop was mature, behind the five-year average of 18 percent. The USDA rated 61 percent of the soybean crop as good to excellent, unchanged from the previous week.

CBOT settlement prices:

Net Pct Volume

Last change change

CBOT wheat WZ7 443.00 4.25 1.0 66085 CBOT corn CZ7 358.50 3.25 0.9 134478 CBOT soybeans SX7 968.50 19.00 2.0 153946 CBOT soymeal SMZ7 308.00 9.20 3.1 65471 CBOT soyoil BOZ7 35.44 -0.23 -0.6 78402

NOTE: CBOT September wheat, December corn and November soybeans shown in cents per bushel, December soymeal in dollars per short ton and December soyoil in cents per lb.

(Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Lisa Shumaker and James Dalgleish)