* Crude oil prices slide more than 3%
* More beneficial rains forecast for Brazil soy
* Traders await U.S. crop report due Friday
CHICAGO, Jan 8 (Reuters) - U.S. corn futures sank to their lowest level in more than three years on Monday and soybean futures set a two-year low as steep declines in crude oil prices spilled over into agricultural markets.
Technical selling and favorable rains in dry crop-growing areas of Brazil helped pressure grain prices, after soybeans fell last week on improving harvest prospects in South America, analysts said.
The losses were a blow to U.S. farmers who will plant their next crops in the spring but benefited livestock producers who must buy grain and soy for animal feed.
"That crude oil has bled into just about everything," said Jim Gerlach, president of brokerage A/C Trading.
Oil prices ended down more than 3%. Energy markets can affect grain futures because corn is used to make ethanol and soybean oil is used to make biofuels.
Most-active Chicago Board of Trade corn futures closed down 5-3/4 cents at $4.55 per bushel and hit the lowest price since December 2020.
Soybean futures ended down 10-3/4 cents at $12.45-1/2 per bushel and reached the lowest price since December 2021. Wheat slid 19-3/4 cents to $5.96-1/4 per bushel at the CBOT.
In Brazil, the world's top soybean exporter, recent rains have reduced concerns about crop losses. Rain is expected to become a bit more widespread this week, forecaster Maxar said.
"After dryness in Brazil in November and December, Brazil's crop weather is improving and the debate will be about how much larger the crop will be," said Matt Ammermann, StoneX commodity risk manager.
Traders are waiting for the U.S. Department of Agriculture to release monthly global supply/demand estimates on Friday and quarterly U.S. grain stocks data.
Concerns over Chinese demand for U.S. soybeans and wheat hung over the futures markets on Monday.
"We could see more increases in forecasts of the Brazilian soybean crop soon," Ammermann said. "With Argentina's crop also looking fine, the stage is being set for a record large South American soybean harvest this year." (Reporting by Tom Polansek in Chicago. Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by Rashmi Aich, Chizu Nomiyama, Jonathan Oatis and Chris Reese)
