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CHICAGO, Nov 18 (Reuters) - U.S. corn futures hit a two-month low on Monday and soybean futures touched their lowest in seven weeks on forecasts for improving crop weather in South America and uncertainty about prospects for a U.S.-China trade deal, analysts said.
Wheat futures rose as worries about tightening global supplies sparked a round of short-covering.
As of 12:43 p.m. CST (1843 GMT), Chicago Board of Trade December corn futures were down 3 cents at $3.68-1/4 per bushel after dipping to $3.68, the contract's lowest since Sept. 18. CBOT January soybeans were down 7-1/4 cents at $9.11 a bushel after hitting $9.10, their lowest since Sept. 30.
Forecasts called for beneficial rains in portions of Brazil and Argentina, the world's No. 1 and No. 3 soybean producers.
"Widespread rainfall is expected (in Brazil) during the six- to 10-day period, which will further boost soil moisture in northern areas and also lead to improvements across central areas, favoring corn and soybean growth," space technology company Maxar said in a daily weather note.
The trade's attention is shifting to South American crop prospects as the U.S. harvest winds down. Ahead of the U.S. Agriculture Department's weekly crop progress report, analysts surveyed by Reuters on average expected the government to report that U.S. farmers harvested 77% of the corn crop and 91% of the soybean crop by Sunday.
Corn and soy futures were also pressured, along with Wall Street equity markets, after CNBC reported that the mood in Beijing about a trade deal was pessimistic due to President Donald Trump's reluctance to roll back tariffs.
Earlier, Chinese state media had said Washington and Beijing held "constructive talks" on trade in a high-level phone call on Saturday that included Vice Premier Liu He, U.S. trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
"The uncertainty is leading to liquidation," U.S. Commodities president Don Roose, referring to agricultural commodities including livestock.
The soybean market is particularly sensitive to developments in the trade negotiations as the oilseed was the most valuable U.S. agricultural export to China prior to the dispute that has seen Beijing impose retaliatory tariffs on U.S. farm goods.
Wheat futures firmed, bucking the weak trend in corn and soybeans. CBOT December wheat was up 4 cents at $5.06-3/4 a bushel, rallying after recording a one-month low at $4.98-1/2.
Commodity funds hold a net short position in CBOT wheat futures, leaving the market vulnerable to bouts of short-covering.
"Australia's wheat crop was short and Argentina's crop was short. We are finding support off some of these things," said Roose.
A weak dollar lent support, making U.S. grains more attractive to those holding other currencies.
(Reporting by Julie Ingwersen; Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Kirsten Donovan and Lisa Shumaker)