* Wheat drops to near eight-week low as US harvest picks up

* Corn and soybeans down heading into shortened trading week

* Grain traders keep close eye on US weather

(Rewrites throughout, adds analyst comments and details on US weather forecasts, new headline, updates bullets, changes byline/dateline from HAMBURG, updates prices as of 1624 GMT)

CHICAGO, June 17 (Reuters) - Chicago Board of Trade wheat and soybean futures fell sharply on Monday, with wheat at a near two-month low as fund selling pressure rolled into a short holiday trading week, traders said.

Meanwhile, corn futures also fell, as traders turned their focus to U.S. weather patterns early in the growing season.

Traders are monitoring U.S. weather as corn crops approach a key development period and U.S. winter wheat harvesting gathers pace. The U.S. Department of Agriculture (USDA) is scheduled to report on U.S. crop progress later on Monday.

Much of the US Corn Belt is forecast to see at least some rainfall this week, with up to 4 inches in some regions, said Karl Setzer, grain analyst and partner at Consus Ag.

Though the Ohio Valley, the Northeast and the Mid-Atlantic are expected to face an extreme heat wave this week, some of these areas could also see rain fall as heat indexes stretch over 100 degrees F, to the U.S. National Weather Service said.

That, in turn, has limited market reaction to the potential soaring temperatures, as well as the fact that recent rains have eased drought concerns much of the U.S. Corn Belt, Setzer said.

"We're not seeing anyone panic this morning at all, because we're not at the pollination stage and the corn crop is only knee-high at best," Setzer said.

"But if these conditions last a week or two longer than expected? That's when you'll see the market react," he added.

The Chicago Board of Trade's most active wheat contract fell more than 3% to $5.92-1/2 a bushel by 1624 GMT, testing the psychologically important $6.00 level and its lowest since April 23.

Corn was down 1.22% at $4.44-1/2 a bushel and soybeans was 1.65% lower at $11.60 a bushel. (Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore. Editing by Sherry Jacob-Phillips, Rashmi Aich, David Goodman and Alexander Smith)