GRAINS-Soybeans higher as Argentina drought stays in focus

* Soy set for 3rd weekly rise as drought grips Argentina

* Traders weigh rain chances as analysts cut crop estimates

* Grain markets digest USDA 2018/19 supply/demand outlook

(Updates with European trading, changes byline/dateline) PARIS/SINGAPORE, Feb 23 (Reuters) - Chicago soybean futures rose on Friday to stay on course for a third week of gains as investors factored in deteriorating prospects for Argentina's harvest due to a severe drought. Wheat was also higher but the market is facing its first weekly loss in six weeks on improved weather across U.S. southern Plains and abundant global supplies. Corn also edged up. Grain markets were digesting supply and demand forecasts from the U.S. Department of Agriculture (USDA), including a slight projected decline in U.S. corn and soybean output in 2018/19, and also awaiting weekly U.S. export sales data later on Friday. The most-active soybean contract on the Chicago Board Of Trade was up 0.4 percent at $10.47-1/4 a bushel by 1243 GMT. CBOT wheat was up 0.9 percent at $4.55-1/2 but still down slightly over the week. Corn edged up 0.2 percent to $3.67-1/2 a bushel to leave it virtually unchanged so far this week. Soybean traders are assessing production downgrades by forecasters along with prospects for light rain next week. "Analysts' pre-season estimates of Argentina's soybean crop were around 55 million tonnes. An earlier round of estimate revisions took that down to 50 million tonnes and the latest round of revisions has production down to 47 million tonnes," said Tobin Gorey, director of agricultural strategy at the Commonwealth Bank of Australia. "And that might not be the end of it." Weather forecasts pointed to some showers in the week ahead but precipitation totals looked modest for the Pampas crop belt. Grain markets showed little immediate reaction to the USDA's first 2018/19 supply and demand outlook, which projected slightly smaller U.S. soybean and corn crops along with lower ending stocks. The USDA had on Thursday predicted U.S. plantings of corn and soybeans at 90 million acres each and wheat slightly above last year's at 46.5 million acres, estimates generally in line with analyst expectations. "Balance sheet forecasts at this time of the year are still unclear since the weather forecasts beyond 10 days are not totally reliable," consultancy Agritel said in a note. Wheat traders are also monitoring an intense cold spell developing across Europe, with deep frosts forecast for the week ahead that could potentially harm crops in areas with limited snow cover.

Prices at 1243 GMT

Last Change Pct End Ytd Pct Move 2017 Move CBOT wheat 455.50 4.25 0.94 427.00 6.67 CBOT corn 367.50 0.75 0.20 350.75 4.78 CBOT soy 1047.25 4.00 0.38 961.75 8.89 Paris wheat Mar 163.00 1.25 0.77 159.00 2.52 Paris maize Mar 153.75 0.50 0.33 157.75 -2.54 Paris rape May 354.25 0.75 0.21 352.75 0.43 WTI crude oil 62.67 -0.10 -0.16 60.42 3.72 Euro/dlr 1.23 0.00 -0.15

Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne

(Reporting by Naveen Thukral in Singapore and Gus Trompiz in Paris; Editing by Biju Dwarakanath and David Evans)