*

Wheat drops to near eight-week low as US harvest picks up

*

Corn and soybeans down heading into shortened trading week

*

Grain traders keep close eye on US weather

(Rewrites throughout, adds analyst comments and details on US

weather forecasts, new headline, updates bullets, changes

byline/dateline from HAMBURG, updates prices as of 1624 GMT)

By P.J. Huffstutter

CHICAGO, June 17 (Reuters) - Chicago Board of Trade

wheat and soybean futures fell sharply on Monday, with wheat at

a near two-month low as fund selling pressure rolled into a

short holiday trading week, traders said.

Meanwhile, corn futures also fell, as traders turned their

focus to U.S. weather patterns early in the growing season.

Traders are monitoring U.S. weather as corn crops approach a

key development period and U.S. winter wheat harvesting gathers

pace. The U.S. Department of Agriculture (USDA) is scheduled to

report on U.S. crop progress later on Monday.

Much of the US Corn Belt is forecast to see at least some

rainfall this week, with up to 4 inches in some regions, said

Karl Setzer, grain analyst and partner at Consus Ag.

Though the Ohio Valley, the Northeast and the Mid-Atlantic

are expected to face an extreme heat wave this week, some of

these areas could also see rain fall as heat indexes stretch

over 100 degrees F, to the U.S. National Weather Service said.

That, in turn, has limited market reaction to the potential

soaring temperatures, as well as the fact that recent rains have

eased drought concerns much of the U.S. Corn Belt, Setzer said.

"We're not seeing anyone panic this morning at all, because

we're not at the pollination stage and the corn crop is only

knee-high at best," Setzer said.

"But if these conditions last a week or two longer than

expected? That's when you'll see the market react," he added.

The Chicago Board of Trade's most active wheat contract

fell more than 3% to $5.92-1/2 a bushel by 1624 GMT,

testing the psychologically important $6.00 level and its lowest

since April 23.

Corn was down 1.22% at $4.44-1/2 a bushel and soybeans

was 1.65% lower at $11.60 a bushel.

(Additional reporting by Michael Hogan in Hamburg and Naveen

Thukral in Singapore. Editing by Sherry Jacob-Phillips, Rashmi

Aich, David Goodman and Alexander Smith)