* Wheat rises on weather, global stocks
* Corn, soy lower as harvest advances
* Stronger dollar weighs on grains
* Coming up: US crop progress data Tues; supply/demand Thurs (Updates with closing market action, adds analyst comments)
By K.T. Arasu
CHICAGO, Oct 8 (Reuters) - Corn and soybeans ended lower on Monday amid the advancing harvest and traders positioning themselves before Thursday’s U.S. supply-demand report that could inject new life into markets languishing after a record-setting drought rally.
Analysts said corn and soybeans were also pressured by a strengthening of the dollar, which found favor with investors seeking safe havens after the euro zone ministers grappling with the debt crisis said Spain did not yet need a bailout.
U.S. wheat rose marginally on concerns over dry weather in the western U.S. Plains, and expectations for global stocks to tighten due to dry weather slashing production in second and third largest exporters Australia and Russia, respectively.
Ken Smithmier, grains analyst with the Hightower Report in Chicago, said he was expecting up to 70 percent of the corn crop to have been harvested as of Sunday, and 55-57 percent of soy.
The U.S. Department of Agriculture will issue its weekly crop progress report on Tuesday instead of Monday due to the Columbus Day holiday. Farmers have so far harvested 54 percent of the corn crop and 41 percent of soybeans.
Wheat traders had their eyes fixed on weather in Western Australia, the country’s top wheat state, and the western portions of the U.S. Plains that were forecast to be dry.
“World wheat production is expected to be lower. Traders will be looking closely at numbers for Australia, Russia and Ukraine,” said Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri.
A Reuters poll last week forecast wheat production in Australia to fall by more than 1 million tonnes, or 5 percent, from the government’s latest estimate of 22.5 million tonnes and down 27 percent from last year’s record high 29.5 million.
“Only light, scattered rain is forecast for the east coast this week, while Western Australia is expected to be dry,” Luke Mathews, commodities strategist at the Commonwealth Bank of Australia, said in a report.
Meanwhile, the USDA’s agricultural attache in Russia said last week that the country’s wheat crop was expected to be the smallest since 2003 this year at 40 million tonnes.
Chicago Board of Trade December corn fell 0.8 percent to end at $7.42 a bushel, while December wheat rose 0.4 percent to $8.61 a bushel.
November soy fell 1/2 cent to close at $15.51 a bushel. The front-month contract has fallen almost 14 percent from a record of $17.94-3/4 a bushel on Sept. 4.
USDA’s monthly supply-demand report on Thursday could provide direction for the next leg of the drought rally that had lifted corn and soybean prices to record highs this summer.
Analysts polled by Reuters expected the USDA to raise its estimate of U.S. soybean yield and production. For corn, they were expecting a higher yield but a smaller crop due to farmers not harvesting larges swathes of their fields due to damage from this summer’s drought.
Morgan Stanley analyst Hussein Allidina was expecting a bearish USDA report for soybeans due to increased production. However, Morgan Stanley expects that much of this incremental supply will be offset by an increase in U.S. export demand, he added.
Allidina said the report could be modestly bullish for corn, adding that production could be down by as much as 60 million bushels from the USDA’s current estimate of 10.727 billion.
On Friday, Informa said the USDA was likely to raise its corn production forecast to 11.194 billion bushels, based on a yield of 127.0 bushels per acre. and its soybean output figure to 2.86 billion bushels on a yield of 37.8 bushels per acre.
Commodity brokerage INTL FCStone also raised its corn and soybean forecasts last week as harvest reports topped expectations. (Additional reporting by Ivana Sekularac in Amsterdam and Naveen Thukral in Singapore; Editing by Jane Baird, David Gregorio and Marguerita Choy)