US corn, wheat, soy fall on firmer dollar, weather outlook

* Soft commodity complex under pressure from firmer dollar

* Weather outlook key focus for U.S. corn, wheat crops

* China soybeans crushers' margins squeezed

* Adds detail, market comment

By Bruce Hextall

SYDNEY, May 4 (Reuters) - U.S. corn futures extended falls on Wednesday as a stronger dollar and falling oil prices weighed on the soft commodities complex.

Soybeans and wheat futures also slipped as the dollar firmed ahead of non-payrolls data on Friday that could provide fuel for a further bounce in the currency, making investors in commodities nervous.

A firmer dollar makes U.S. dollar priced currencies more expensive for buyers of commodities holding other currencies.

The dollar's downside momentum appeared to be easing with the currency repeatedly bouncing off three-year troughs as markets grow increasingly wary about a correction given very stretched short positions.

US dollar index against major currencies basket up

Brent oil falls below $122 on big U.S. crude build

For more technical analyses

For a 24-hour corn technical outlook: http://

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"On a macro theme all commodities seem to be overbought and perhaps the catalyst for a correction will be a stronger U.S. dollar," said Adam Davis, senior grains trader at Merricks Capital in Melbourne which invests in agricultural commodities.

"Against all major currencies the U.S. dollar seems to be strengthening and it is going to push commodities lower for the time being, plus oil prices have come off quite strongly," said Davis.

Weather concerns are also at the forefront in grains and oilseeds markets.

Forecasts of warmer, dry weather in the U.S. Midwest corn belt saw the December harvest contract fall 0.72 percent to $6.57-1/2 per bushel by 0425 GMT, after last week rising as high as $6.82, approaching levels not seen since early 2008.

The bellwether July contract dropped 0.45 percent to $7.20-1/2 per bushel, adding to a 1.5 percent fall on Tuesday.

"The Midwest weather outlook looks a little bit more promising for this week and next and it seems like there will be a little bit of rain in the central plains and southern plains maybe which will be helpful for the wheat crop," said Davis.

The planting window for corn in the United States is narrowing as heavy rain in the eastern and southern Midwest had slowed seeding to a snail's pace.

The U.S. Department of Agriculture reported on Monday that only 13 percent of this year's U.S. corn crop had been planted, well below the five-year average of 40 percent.

"Corn planting has been the focus in the U.S. but I think it is too early to be writing off too many acres - most farmers are happy to plant corn to the end of May - the margin over soybeans is so great so if you are a farmer in the Midwest you are going to do your utmost to plant corn," said Davis.

Robust demand for U.S. corn has left domestic stocks at the tightest level since the 1930s, keeping prices close to record levels.

High corn prices have seen feed grain buyers in China and South-East Asia switch to buying Australian feed wheat which is in abundant supply as a wet 2010/11 harvest saw millions of tonnes of the grain downgraded to feed quality.

Wheat for July delivery fell 0.60 percent to $7.88-1/2 although prices remain nearly 30 percent above levels a year ago due to Black Sea supplies drying up after a severe drought and on-going concerns about continuing dryness in the region as well as Germany and France.

Dry weather has also raised concerns about the U.S. winter wheat harvest.

"We're also experiencing the U.S. weather market - there's plenty of weather risk premium priced into the market but I'm wondering once we get through the other side of the weather market in the U.S. we might see prices come off a little bit," said Davis.

SOYBEANS UNDER PRESSURE AS CRUSHING MARGINS FALL

Apart from the influence of a stronger dollar, soybeans futures fell for the sixth time in seven sessions, weighed down by softening demand in China, the world's top soy importer, and larger-than-expected South American crops.

Soybeans for July delivery dropped 0.24 percent to $13.60-1/2 per bushel though still remain nearly 40 percent higher than a year ago.

High prices have eroded margins for China's soybeans crushers.

"Crush margins in China are really struggling," said Davis.

U.S. food group Archer Daniels Midland Co on Tuesday reported lower earnings from its crushing joint venture in China with Singapore's Wilmar International .

"ADM reported last night and it is clear from those results things have been really tough in the crushing business in China - that's a barometer that points to lower imports until such time as we see a price drop or the Chinese government allows a rise in prices of end products," said Davis.

GRAIN PRICES AT 0425 GMT

Contract    Last    Change  Pct chg  Two-day chg MA 30   RSI 	
CBOT wheat  788.50   -4.75  -0.60%    -0.41%     800.58   45	
CBOT corn   720.50   -3.25  -0.45%    -1.91%     740.03   39	
CBOT soy   1360.50   -3.25  -0.24%    -2.33%    1371.58   46	
CBOT rice   $15.43   +$0.04  +0.26%    +1.55%     $14.36   79	
WTI crude   $110.67  -$0.38  -0.34%    -2.51%    $109.48   47	
 Currencies                                                	
 Euro/dlr   $1.480  -$0.002  -0.12%    -0.14%    	
 USD/AUD     1.081   -0.002  -0.18%    -1.15%    	

Most active contracts

Wheat, corn and soy US cents/bushel.

Rice: USD per hundredweight

RSI 14, exponential

(Source: http://www.reuters.com/article/2011/05/04/markets-grains-idUSL3E7G419H20110504)