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GRAINS-Soybean prices drop to 3-mth low as S.American rains boost crops

SINGAPORE, Dec 22 (Reuters) - Chicago soybean futures on Friday fell for a seventh session, hitting a three-month low as improved weather across Brazil and Argentina boosted expectations for another bumper harvest in South America. Wheat prices were little changed after rallying for the past two sessions on the back of higher demand for U.S. shipments.

FUNDAMENTALS

* The soybean market is being dragged down by rains in Argentina's drought-hit producing regions and forecasts of all-time high output in Brazil.

* Higher soybean production in South America is expected to increase competition in the global market with U.S. exports already running behind last year's pace.

* The Chicago Board of Trade's most-active soybean contract is on track for a third week of decline, down more than 2 percent this week. Corn is up about 1 percent this week after falling for the past two weeks, while wheat has risen 2.2 percent this week in its biggest weekly gain since mid-September.

* More stringent specifications for U.S. soybean imports in China, the top global buyer, are adding to the bearish headwinds for soybeans.

* U.S. shipments to China as of Jan. 1 will be required to have reduced foreign material content to expedite unloadings, the U.S. Department of Agriculture said on Wednesday.

* Higher-than-expected demand for U.S. wheat is supporting prices.

* The USDA on Thursday said weekly U.S. export sales of 796,300 tonnes of wheat and 1.6 million tonnes of corn were higher than analyst expectations, while sales of 1.7 million tonnes of soybeans were at the high-end of estimates.

* U.S. export sales of a certain type of wheat were the biggest in more than three years, the U.S. Department of Agriculture said on Thursday, as low prices prompted livestock producers in Asia to buy the grain as animal feed.

* Soft red winter wheat, the variety traded on the CBOT, is usually used to make flour for cookies and crackers. However, prices for lower-grade supplies declined enough to make it a bargain for poultry and livestock farmers, U.S. and European export traders said.

* Commodity funds were net buyers of CBOT corn and wheat futures contracts on Thursday and net sellers of soybeans, soyoil and soymeal, traders said.

MARKET NEWS

* Asian stocks edged up on Friday on new data pointing to steady growth in the U.S. economy, while the euro slipped after a vote in Catalonia favored separatists wanting to break away from Spain.

DATA AHEAD (GMT)

0930 U.K. GDP Q3

Grains prices at 0140 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 427.00 0.00 +0.00% +1.79% 431.38 74 CBOT corn 351.00 -0.25 -0.07% +1.01% 352.84 75 CBOT soy 946.50 -2.25 -0.24% -0.99% 982.19 19 CBOT rice 11.86 -$0.14 -1.13% +1.24% $12.05 50 WTI crude 58.16 -$0.20 -0.34% +0.12% $57.19 60

Currencies

Euro/dlr $1.184 -$0.004 -0.30% -0.27% USD/AUD 0.7710 0.001 +0.13% +0.57%

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

(Reporting by Naveen Thukral; Editing by Joseph Radford)