GRAINS-Corn weakens on rain across U.S. Midwest, soybeans gain for fifth session

* Chinese demand helps lift soybean prices

* Rain across U.S. Midwest weighs on corn

* Wheat futures tumble (Updates with closing prices)

CHICAGO, July 20 (Reuters) - Chicago corn futures dropped on Monday, as rainfall strengthened crop conditions during a crucial stage in development.

Soybean futures gained for a fifth consecutive session on renewed Chinese demand and support from the soybean oil market. Wheat, meanwhile, sank as harvest across the U.S. Great Plains continued and a strengthening dollar diminished export potential.

The most active corn futures on the Chicago Board of Trade settled down 4-3/4 cents to $3.28-1/4 per bushel.

CBOT soybeans added 5 cents to end at $9.03 a bushel, after reaching the highest for an active contract since March 6. CBOT wheat fell 12-3/4 cents to $5.22 a bushel.

Corn crop prospects across the Midwest improved after much-needed rains eased concerns that dryness could damage the crops during the crucial pollination stage. The U.S. Department of Agriculture is set to update its crop condition ratings in a weekly report later on Monday.

“We’ve gone 180 (degrees) from what we thought could be a terrible weather event to now a crop that’s pretty much made,” said Terry Reilly, senior agriculture futures analyst at Futures International.

Last week corn exports to China supported the market, with hopes that Beijing will fulfil its agreement to import $36.5 billion in U.S. agricultural goods in the first year of its Phase 1 trade deal.

“I expect that to continue, if they’re going to hit those Phase 1 targets,” said Dan Hussey, senior market strategist at Zaner Group.

Soybean futures continue to climb as China booked 132,000 tonnes of U.S. soybeans, according to the U.S. Agriculture Department on Monday.

That is on top of confirmed sales last week of 1.5 million tonnes of U.S. soybeans, including about 1 million tonnes to China.

“Knowing that Brazil is pretty much tapped out in their export potential, it really does open the door for China to turn their eyes toward a very cheap soybean crop here in the United States,” said Hussey. (Reporting by Christopher Walljasper in Chicago; Editing by Cynthia Osterman)

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