* 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 (Rewrites throughout with USDA supply/demand data, adds quote, updates prices, changes byline, dateline, previous LONDON)
CHICAGO, Aug 10 (Reuters) - U.S. soybean futures dropped more than 4 percent on Friday after the U.S. Department of Agriculture (USDA) projected larger-than-expected crop yields in the United States and said U.S. and global stocks of the oilseed would swell to record highs.
Corn and wheat prices also dropped as the 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 were down 37 cents, or 4.1 percent, at $8.67 a bushel by 12:23 p.m. CDT (1723 GMT).
CBOT December corn fell 7-3/4 cents, or 2 percent, to $3.75 a bushel, a two-week low.
CBOT September soft red winter wheat shed 9-1/4 cents, or 1.6 percent, to $5.55-1/4 a bushel.
All three were on pace for their first weekly declines in four weeks.
Traders will be turning their focus to crop weather in the United States as the corn and soybean harvest nears. Forecasts for drier weather in parts of the U.S. Midwest over the coming weeks had lifted corn and soybean prices earlier this week amid worries that the stressful weather could trim yield prospects.
Wheat prices, meanwhile, 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, citing parched conditions in northern Europe that have led to "catastrophic" yields in Germany and Scandinavia. (Additional reporting by Naveen Thukral in Singapore and Nigel Hunt in London; Editing by Jan Harvey and James Dalgleish)