* Mostly dry U.S. Midwest weather to boost corn, soy harvest
* Traders positioning ahead of Friday USDA crop report
* Market awaiting fresh news from U.S.-China trade talks (Rewrites throughout with U.S. market open, adds quote, updates prices, changes byline, previous dateline HAMBURG)
CHICAGO, Nov 5 (Reuters) - U.S. corn futures dropped to a 3-1/2 week low on Tuesday while soybeans fell for the first time in four sessions as largely dry U.S. Midwest weather propelled harvesting, and rains bolstered crop prospects in South America where farmers are planting corn and soy.
Positioning ahead of a monthly U.S. Department of Agriculture (USDA) crop supply and demand report on Friday also weighed on prices as traders anticipated minimal reductions to corn and soy crop outlooks despite poor crop weather this year.
"The harvest is rolling along and farmers are selling. There's no bullish news out there and it's just a slow bleed lower," said commodities broker Craig Turner at Daniels Trading.
"U.S. weather is fine and the latest weather in South America is also good for crops, so a little bit of the weather premium is coming out," he said.
CBOT December corn fell 1-1/2 cents to $3.81-3/4 per bushel by 12:18 p.m. CST (1818 GMT) while January soybeans shed 1-1/4 cents to $9.36-3/4 a bushel.
The USDA said on Monday that 52% of the U.S. corn crop was harvested as of Sunday, slightly behind market forecasts of 54%. Soybeans were 75% harvested, on par with expectations.
Some precipitation is expected across the Midwest farm belt over the next week, but the weather is not expected to significantly delay harvesting, according to weather forecaster Maxar.
Some concerns about U.S.-China trade negotiations are overhanging the market as a "phase one" deal remains unsigned. China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of the deal, people familiar with the negotiations said on Monday.
U.S. wheat futures rose modestly on Tuesday after the USDA reported slower-than-expected winter crop planting progress.
The agency said 89% of the U.S. winter wheat crop had been planted, behind market expectations of 91%.
U.S. wheat prices were capped by stiff competition in global export markets. Major wheat importer Egypt bought French and Russian grain in its latest tender that did not feature any offers of U.S. wheat.
CBOT December wheat futures rose 2-1/2 cents to $5.12-1/4 a bushel, rebounding from a 1.2% drop in the previous session.
(Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore Editing by David Goodman and Richard Chang)