GRAINS-Soy, corn follow broad commodities strength higher

(Recasts throughout; updates prices, adds quotes; changes byline, dateline, previous LONDON) CHICAGO, Dec 1 (Reuters) - U.S. soybean futures rose Friday and corn futures hit a three-week high, following broad strength in commodities at the start of the month and a softer U.S. dollar, analysts said. The 19-market Thomson Reuters CoreCommodity Index rose 0.8 percent, snapping a four-session slide. Chicago Board of Trade January soybeans settled up 8-1/2 cents at $9.94-1/4 per bushel and March corn ended up 3 cents at $3.58-3/4 a bushel after reaching $3.59-1/2, its highest since Nov. 9. Wheat followed the firm trend, buoyed by fund short-covering and fears that storms could damage mature wheat in easterly Australia. CBOT March wheat rose 5-1/2 cents at $4.38-1/2 but stayed within Thursday's trading range. Grains got a boost as the dollar index sagged. U.S. stocks, the dollar and Treasury yields sank after an ABC report said former national security advisor Michael Flynn was prepared to testify that Donald Trump instructed him to make contact with Russians during the presidential campaign. A weaker dollar tends to make U.S. grains more attractive to those holding other currencies. "The commodity sector has fared well overall through this morning's drama on Wall Street, with new money coming into the sector as we turn the calendar," INTL FCStone chief commodities economist Arlan Suderman said in a note to clients. "Soybeans are the most attractive for fund managers, due to the volatility that they generally present when adverse weather hits," Suderman said. Parts of Argentina's soy and corn belt received beneficial rains this week but dryness remains a concern across several provinces. Conditions are generally favorable in Brazil, the world's biggest soy exporter, MDA Weather Services said in a note to clients. Commodity funds hold large net short positions in both corn and wheat, leaving those markets prone to bouts of short-covering. "You could see some money rotation ahead of the year's end. You could get a rotation out of equities ... that would mean short-covering in corn and wheat," said Joe Vaclavik, president of Chicago-based Standard Grain. Wheat found support this week from the prospect of a fall in U.S. wheat area. Meanwhile, in eastern Australia, heavy rains forecast to intensify over the weekend are threatening to wipe out or damage up to 4 million tonnes of wheat due to be harvested soon, with many grain storage sites forced to close.

CBOT settlement prices:

Last Net Pct Volume

change change

CBOT wheat Wc2 438.50 5.50 1.3 63005 CBOT corn Cc2 358.75 3.00 0.8 149068 CBOT soybeans Sc1 994.25 8.50 0.9 124678 CBOT soymeal SMc2 330.20 3.70 1.1 47351 CBOT soyoil BOc2 33.69 -0.16 -0.5 45810

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

(Reporting by Julie Ingwersen)