* Traders squaring positions ahead of USDA report on Thursday
* Soybeans drop as Trump repeats China tariff threats
* Rainy Midwest weather limits losses in corn, soybeans
* Wheat bounces on renewed hopes for U.S. exports (Rewrites throughout with U.S. market open, adds quote, updates prices; changes byline, dateline, previous SINGAPORE/PARIS)
By Karl Plume
CHICAGO, Oct 9 (Reuters) - U.S. soybean futures retreated on Tuesday as the market braced for an anticipated increase in the government’s 2018 harvest forecast and amid concerns of a prolonged trade war with China, the world’s top soybean importer.
Corn futures followed soybeans lower, easing for a second straight session as traders positioned for the U.S. Agriculture Department’s (USDA) supply-and-demand report for October due on Thursday.
Concerns about a rain-delayed corn and soy harvest in the western Midwest limited price declines.
Wheat futures edged higher on signs of improving U.S. export demand, although prices remain capped by big global supplies and stiff export competition.
Analysts polled ahead of Thursday’s report, on average, expect the USDA to increase its U.S. corn and soybean yield and production forecasts as well as raise its U.S. and world grain and soybean stocks projections.
Chicago Board of Trade (CBOT) November soybeans fell 5-3/4 cents to $8.64 a bushel by 11:37 a.m. CDT (1637 GMT), while December corn dipped 2 cents to $3.64-1/2 a bushel.
CBOT December wheat rose 1-1/4 cents to $5.15-1/4 per bushel, rebounding from overnight declines after the USDA announced a large hard red winter wheat export sale to Bangladesh.
Worries about an extended trade war between the United States and China pressured soybeans after U.S. President Trump on Tuesday reiterated threats to impose tariffs on $267 billion worth of additional Chinese imports if Beijing retaliates for recent U.S. tariff actions.
“That is weighing heavily on soybeans,” said Ted Seifried, chief agricultural market strategist for Zaner Group in Chicago.
“It doesn’t sound like there has been any progress (in trade talks) at all. It sounds like we’re at a stalemate and it sounds like, if anything, it will get worse before it gets better,” he said.
Rains in parts of the western Midwest provided underlying support to the market, however, along with a rising currency in soy export rival Brazil after a strong first-round electoral showing by far-right presidential candidate Jair Bolsonaro.
The USDA’s weekly harvest progress and crop condition report, scheduled for release after Tuesday’s market close, is expected to show that corn and soybean harvesting remains ahead of normal, although the pace is expected to slow with this week’s rains. (Additional reporting by Naveen Thukral in Singapore and Sybille de La Hamaide in Paris; editing by Mark Potter and G Crosse)