Corn near two-week high on dry U.S. weather; soy firm

Soybeans ticked up in early Asian trade as investors squared positions ahead of a U.S. Department of Agriculture supply-demand report on Tuesday which will update ending stocks and South American grain output.

FUNDAMENTALS

* The primary focus will be on weather this week. A lack of rain in the Midwest last week helped propel Chicago Board of Trade corn futures to their biggest weekly gain in just over a year.

* Traders have been building risk premiums in corn futures as high heat and dry weather stressed the crop. A bumper harvest is essential to replenish U.S. stocks, which will tumble this summer to the smallest in 16 years.

* Nervous market participants grew even more anxious about crop prospects on Friday due to talk of low production estimates from analytics company Lanworth, a unit of Thomson Reuters (TRI.N).

* Traders said Lanworth pegged this year's U.S. corn crop at 13.645 billion bushels, with a range of 12.043 billion to 13.861 billion bushels. Lanworth said the forecasts were taken out of a report that is not in the public domain.

* The USDA in May pegged this year's U.S. corn crop at a record 14.79 billion bushels, but that was before the onset of the hot and dry weather in the Midwest.

* The corn crop could be under more stress this week and next, when a meteorological ridge, commonly referred to by traders as a dome, is set to appear over the Midwest and take temperatures into the low- to mid-90s degrees Fahrenheit.

* Analysts said the USDA was highly unlikely to adjust it corn yield of 166 bushels per acre in Tuesday's report, but that it could do so in July if the crop continues to deteriorate.

* A Reuters poll showed that analysts were expecting the USDA to reduce its estimate of 2011/12 U.S. corn ending stocks due to an increase in feed-use following a surge in wheat prices.

MARKET NEWS

* The euro was poised to stage its biggest daily rally against the dollar in almost eight months on Monday, after Spain secured help for its debt-ridden banks and as Chinese economic data, while disappointing, was not as bad as the market had feared.

* U.S. stock index futures pointed to steep gains on Sunday, looking to extend Wall Street's recent rally. .N

* Crude oil futures rose $2 in early Asian trading on the developments in Europe and after talks between the United Nations and Iran failed.

(Reporting by Naveen Thukral; Editing by Joseph Radford)