Chicago corn and soy strengthen on weaker dollar

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World financial market losses hit wheat before a recovery

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Funds buy back short positions in corn, soy

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Weaker dollar supports exports

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(Rewrites throughout, updates prices, updates bullets)

By Renee Hickman

CHICAGO, Aug 5 (Reuters) - Chicago corn and soybeans strengthened on Monday as the weaker dollar supported U.S. exports and funds bought back some of their short positions.

Wheat futures closed slightly higher after falling earlier as global financial markets tumbled on fears of a U.S. recession.

Chicago Board of Trade most-active corn rose 4 cents to $4.07 a bushel. Soybeans jumped 13.5 cents to $10.40-3/4 a bushel. Wheat settled up 1/2 cent to $5.39-1/2 a bushel.

Global stock markets tumbled as fears of a U.S. recession sent investors fleeing from risk, while wagering that rate cuts would be needed to rescue growth, with the dollar falling against major currencies.

The lower-trending dollar is a supportive factor for corn and soybeans, said Randy Place, analyst with the Hightower Report. A weaker dollar tends to make U.S. exports more attractive.

He added that commodity funds were already heavily short in corn and soybeans. When the stock market is down significantly with energy and metals also sinking, the funds have to reduce risk and buy back some of their short positions, said Place.

U.S. weather was forecast to be largely dry this week, also positive for the final stages of the U.S. winter wheat harvest.

After markets closed, the U.S. Department of Agriculture reported weekly condition ratings for the U.S. corn crop fell in the past week, in line with analysts' estimates, but soybean ratings surprisingly improved.

Spring wheat ratings

held steady.

In the EU the wheat harvest, hindered by summer rain, was showing progress. French farmers harvested 67% of this year's soft wheat crop by July 29, advancing from 41% a week earlier, though behind usual progress after rain disrupted work. (Reporting by Renee Hickman in Chicago, additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore, editing by Chris Reese)