* Soybeans notch highest since Sept. 23 on technical buying
* Wheat falls after Friday stocks report (New throughout, updates prices and market activity to U.S. close, adds weekly crop progress)
By Rod Nickel
WINNIPEG, Manitoba, Oct 3 (Reuters) - U.S. corn futures jumped to a 10-1/2 week high on Monday, lifted by trades that simultaneously bought the grain and sold wheat, after last week's report on supplies by the U.S. Department of Agriculture.
Chicago wheat slipped, while soybeans rose to their highest since Sept. 23 on short-covering and gains in soymeal.
The USDA on Friday said U.S. wheat stocks as of Sept. 1 were the biggest since 1987, while corn supplies were smaller than expected.
On Monday, the USDA also reported increases in export inspections for corn and soybeans from the previous week, with a drop for wheat.
"We know we've sold a lot of corn, a lot of beans," said Bill Gary, president of Commodity Information Systems in Oklahoma City. " ... The key is going to be whether we can maintain this pace."
He added that traders were selling wheat and buying corn or soybeans in spread trades.
The Chicago Board of Trade's nearby December corn contract gained 2.8 percent, or 9-1/4 cents, to $3.46 a bushel.
The contract touched $3.47-3/4, the highest for a nearby contract since July 19. It got a boost from more short-covering after Friday's weekly U.S. Commodity Futures Trading Commission report showed funds expanded their net short in corn.
The European Commission on Monday slashed its estimate of this year's European Union maize harvest for the second month in a row.
In Friday's crop report, the USDA said 1.738 billion bushels of corn were in storage on Sept. 1, below analysts' expectations.
Chicago most active December wheat gave up 1.7 percent or 6-1/2 cents, to trade at $3.95-1/2 a bushel.
The USDA's larger-than-expected Sept. 1 stocks estimate pressured wheat, said John Ulrickson, a broker at market advisory service Money Farm in North Dakota.
Most active November soybeans gained 2.2 percent, or 19 cents, to $9.73 a bushel, helped by technical buying and short-covering.
After markets closed, the USDA's weekly update on U.S. crop progress estimated the corn and soybean harvest at 24 percent and 26 percent complete respectively as of Sunday. Analysts' estimates of harvest progress ranged from 22 percent to 28 percent for soybeans and from 23 percent to 30 percent for corn. (Additional reporting by Julie Ingwersen and Michael Hirtzer in Chicago, Sybille de La Hamaide in Paris and Naveen Thukral in Singapore; Editing by Lisa Von Ahn and David Gregorio)