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GRAINS-U.S. corn, wheat rally on short-covering; soy firm

(Updates with U.S. trading, adds new analyst comment, changes byline, dateline; pvs PARIS/SINGAPORE)

CHICAGO, Oct 23 (Reuters) - Chicago Board of Trade corn and wheat futures firmed on Monday on a round of short-covering after U.S. regulatory data released late on Friday showed that speculators had boosted their bearish bet on both commodities.

Wheat futures notched the biggest gains, rallying 2 percent. Corn and wheat weakened early but turned higher after finding support above contract lows.

"I think it is a lot of technical stuff," said Dan O'Bryan, risk management specialist and broker at Top Third Ag Marketing. "You are getting a little bit of strength in the wheat and the corn because you have got big fund short positions and there was not a lot of follow through selling when they tried to test the lows."

Corn was also boosted by rainy conditions in key growing areas of the U.S. Midwest that threatened to delay harvest. The harvest concerns likewise lent support to soybean futures.

At 10:34 a.m. CDT (1524 GMT), Chicago Board of Trade December wheat futures were 8-1/2 cents higher at $4.34-1/2 a bushel. CBOT December corn was up 5-1/2 cents at $3.50 a bushel.

The U.S. Commodity Futures Trading Commission's Commitments of Traders report on Friday showed speculators held the biggest net short position in corn futures and options in 4-1/2 months as of Oct. 17. The weekly report also showed that speculators have boosted their net short in the yellow grain for 10 straight weeks.

Speculators have increased their bearish bet on wheat for three weeks in a row.

CBOT November soybean futures were up 3 cents at $9.81-3/4 a bushel.

Grain markets will get an update on corn and soybean harvesting, along with wheat sowing, in a weekly U.S. Department of Agriculture (USDA) report published after market close on Monday.

Traders also were assessing the prospects for rain in dry soy belts in Brazil.

"The dry regions (of Brazil) did get some substantial rain over the weekend," said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia. "Very high temperatures though mean the gains in soil moisture will have been limited. Weather forecasters expect more rain in the next couple of weeks that may allay the market's concerns. (Additional reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; Editing by Dale Hudson and Meredith Mazzilli)