* USDA's U.S. corn, soy yield outlooks top trade forecasts
Record U.S. soy harvest and record ending stocks expected
* USDA trims global wheat stocks by less than expected (Adds closing prices, weekly trends)
By Karl Plume
CHICAGO, Aug 10 (Reuters) - U.S. soybean futures tumbled nearly 5 percent on Friday in the steepest single-day percentage drop in three years after the government projected larger-than-expected U.S. crop yields and said stocks of the oilseed would swell to record highs.
Corn and wheat prices also dropped as the U.S. Department of Agriculture (USDA) forecast a bigger average U.S. corn yield than the market had anticipated and did not cut global wheat supplies as deeply as analysts had projected.
Wheat prices turned lower after the report was released at midmorning while corn and soybeans extended declines.
"Traders were in a panic-selling mode initially, especially in the beans and the wheat market," said Terry Reilly, senior commodities analyst with Futures International.
"The trade's going to have to calculate in much larger crops in the U.S. that, for now, more than outweigh production problems outside the U.S."
In its monthly supply and demand report, the USDA projected a record-large 2018 U.S. soybean crop and the highest U.S. corn yield on record. U.S. soybean stocks at the end of the 2018-19 season next August were seen swelling to an unprecedented 785 million bushels.
The agency increased its export outlook for U.S. soybeans, but traders remain nervous about the country's deepening trade war with China, the world's top soy importer.
Chicago Board of Trade November soybeans fell 42-1/4 cents to $8.61-3/4 a bushel, down 4.7 percent in the session and 4.5 percent lower for the week. The daily decline was the steepest for a most-active soybean contract in three years.
CBOT December corn fell 11 cents, or 2.9 percent, to $3.71-3/4 a bushel, a two-week low. For the week, the contract was down 3.3 percent.
CBOT September soft red winter wheat shed 17-3/4 cents to $5.46-3/4 a bushel, a 3.1 percent daily decline and down 1.7 percent on the week.
All three posted their first weekly declines in four weeks.
Traders are turning their focus to U.S. crop weather as the corn and soybean harvest nears. Forecasts for drier weather in parts of the U.S. Midwest had lifted corn and soybean prices earlier this week on worries that the stressful weather could trim yield prospects.
Wheat prices have been underpinned by dryness curbing yields across key exporting nations in Europe and the Black Sea region.
Analysts at Strategie Grains made another steep cut this week to their estimate for this year's European Union soft wheat harvest. (Additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London; Editing by James Dalgleish and Richard Chang)