PARIS/SINGAPORE (Reuters) - U.S. wheat slid more than one percent on Tuesday, giving up some of the big gains notched up before a three-day holiday weekend, as rain in parts of Australia and the Black Sea region eased recent concerns about dry weather denting global wheat supply.
Corn and soybean futures performed better as some weather models forecast crop-stressing heat in the U.S. Midwest this week, shifting the weather focus away from wheat.
But worries across markets that the euro zone debt crisis will engulf Spain kept a lid on prices, helping push corn lower and trimming earlier gains for soy.
"For grains, the weather is the key factor leading to weakness in wheat, while supporting corn and soybeans," said Lynette Tan, an analyst with Phillip Futures in Singapore.
Chicago Board of Trade July wheat fell 1.8 percent to $6.67-1/2 a bushel by 1118 GMT, after rising 2.6 percent on Friday as dry conditions in major growing belts in the United States, Russia and Australia made operators nervous.
Concern about stress on wheat crops had fuelled a spectacular rally in the week before last, with Chicago front-month prices surging 17 percent.
Reports of rain in dry southern Russia since the weekend reassured the market, with Russia's state forecaster predicting more rainfall this week.
"The rain that has fallen in the Black Sea region in the past few days is weighing on prices but we're not yet completely out of this weather market," a European trader said.
Much-needed rainfall over the weekend across Australia's eastern grain-belt has raised hopes of higher yields for the 2012/13 wheat crop as farmers in one of the world's top exporters wind up planting.
New-crop European wheat futures, which hit an 11-month high a week ago, tracked Chicago prices lower. November milling wheat was down 1.4 percent at 213.00 euros a metric ton.
Technical support at 210 euros and continued weakness in the euro, which stayed close to a near two-year low against the dollar on fears about Spain, helped underpin Paris prices.
U.S. markets resumed trading after staying closed on Monday for the Memorial Day holiday in the United States. European grain markets had traded in the previous session but a public holiday in several countries kept activity light.
Large speculators bailed out of their near-record short positions in Chicago wheat in the week when the market posted its biggest rally in 16 years, slashing their bearish bets by 58 percent to the smallest in 8-1/2 months amid concerns over global crop prospects.
MIDWEST RAIN AWAITED
July soybeans rose 0.7 percent to $13.91-1/2 per bushel, while July corn slipped 0.4 percent to $5.76-1/4, after giving up a small earlier rise.
Conflicting forecasts by European and U.S. weather models for the U.S. Midwestern grain belt this week, a time when rains are essential for the fledgling corn crop, may cause a tug-of-war between bulls and bears.
Meteorologist David Streit of Commodity Weather Group said the U.S. weather model, as of Friday afternoon, was showing rains across 75 percent of the Midwest while the European model forecast rain for just 25 percent of the region.
Corn planting in the Midwest got off to a record start in March due to the mildest winter in decades and the favorable conditions for the crop led the U.S. Department of Agriculture earlier this month to forecast a record crop this year.
Since then, some areas of the Midwest, where the bulk of U.S. corn and soybeans are grown, have turned dry, raising concerns the crop could suffer without timely rains.
"While ideal weather in the yield-determining months of July and August could reverse current crop stress, poor early season conditions make record yields increasingly less likely," Morgan Stanley analysts said of the U.S. corn crop.
* Prices as of 1118 GMT
Product Last Change Pct Move End 2011 Ytd Pct
Paris wheat 213.00 -3.00 -1.39 195.25 9.09
London wheat 158.00 -1.00 -0.63 153.65 2.83
Paris maize 213.25 -1.75 -0.81 197.25 8.11
Paris rape 468.25 1.25 +0.27 421.50 11.09
CBOT wheat 667.50 -12.50 -1.84 652.75 2.26
CBOT corn 576.25 -2.25 -0.39 646.60 -10.88
CBOT soy 1391.50 9.50 +0.69 1198.50 16.10
Crude oil 91.30 0.44 +0.48 98.83 -7.62 * Paris futures prices in Euros per metric ton, London wheat in pounds per metric ton and CBOT in cents per bushel.
(Editing by Miral Fahmy and Keiron Henderson)