Wires

GRAINS-Soybeans drop as harvest accelerates, traders eye U.S.-China talks

Karl Plume

* U.S.-China trade talks remain focus for grains markets

* Trade negotiators said nearing phase one deal

* Rain to slow U.S. harvest this weekend, dry beyond that (Recasts with soybeans extending losses, adds closing prices, weekly trends)

CHICAGO, Oct 25 (Reuters) - U.S. soybean futures fell to two-week lows on Friday on an accelerating U.S. harvest and disappointing demand from China as purchases have not lived up to trade expectations since Beijing offered crushers a quota of duty-free imports early this week.

Wheat firmed for just the second time this week on optimism the United States and China are moving closer to a trade deal that could bolster American farm product exports, while corn ended flat.

Grain traders have focused on U.S. Midwest corn and soy harvest weather as farmers have struggled to gather developing crops. Storms are expected to chase farmers from fields in the eastern Corn Belt this weekend ahead of a drier weather pattern.

The market has also remained cautious this week with U.S. and Chinese negotiators working to nail down a phase one trade agreement ahead of an expected meeting next month between presidents Xi Jinping and Donald Trump at a summit in Chile.

Trade officials from both countries are "close to finalizing" some parts of an agreement after high-level telephone discussions on Friday, the U.S. Trade Representative's office said. Accelerated U.S. agricultural product purchases in return for relief from U.S. tariffs on Chinese goods are among measures being discussed.

"Based on comments from both the U.S. and China, we're going to have the beginnings of a deal at the APEC conference," said Jim Gerlach, president of A/C Trading, referring to the summit in Chile.

"Demand is what's been holding the market down so whenever you get good news on demand it takes a lot of pressure off the market."

Optimism for larger U.S. soybean purchases had propped up the market earlier in the week before Friday's profit-taking retreat.

Chicago Board of Trade (CBOT) November soybeans fell 13 cents to $9.20-1/4 a bushel, the lowest since Oct. 10. The actively traded contract shed 1.5% in the week, its second straight weekly drop after hitting a four-month high at mid-month.

December corn futures ended unchanged at $3.86-3/4 a bushel, ending the week down 1.1% for a second consecutive weekly decline.

CBOT December wheat settled 1-3/4 cents higher at $5.17-3/4 per bushel. The contract was down 2.7% in the week, its first weekly drop in two months.

Argentina's presidential election on Sunday is being monitored to see if it changes export tax policy in the major wheat, corn and soybean supplier in the midst of an economic crisis. (Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Rashmi Aich, Susan Fenton, Tom Brown and Richard Chang)