* U.S. July corn breaks 100-day moving average
* Wheat, soy rally in volatile session
* Coming up: Weekly U.S. crop progress report on Monday (Updates with closing prices, weekly changes in value)
By Julie Ingwersen
CHICAGO, May 6 (Reuters) - Corn futures fell 3 percent on Friday as a surge in the dollar and a downturn in crude oil triggered a fresh round of long liquidation, one day after the biggest sell-off in commodities since 2008.
A pickup in the seeding pace of this year's U.S. corn crop added pressure as weather conditions in some areas of the Midwest improved.
Noted crop forecaster Informa Economics told clients on Friday that it had raised its estimate of U.S. corn plantings to 91.9 million acres from 91.758 million in March. The U.S. Department of Agriculture has forecast 92.2 million acres.
Front-month corn futures on the Chicago Board of Trade fell 9.4 percent for the week, their biggest weekly drop since October.
Wheat futures fell 5.8 percent for the week and soybeans fell 4.9 percent.
However, wheat and soybeans both closed higher on Friday following a choppy session.
CORN MARKET EYES RENEWED DROP IN CRUDE OIL
Corn rallied early but came under pressure later in the session, following a setback in crude oil as the dollar rose. The dollar rallied after a German news report, later denied, suggested Greece had raised the possibility of leaving the euro zone.
"There is so much uncertainty right now. Crude began crashing again late and the dollar came back so dramatically," said Rich Feltes, vice president of research with R.J. O'Brien.
"The important themes are that the tail wind from capital inflows to commodities as a preferred asset class -- all of that is on hold until we can stabilize and establish an uptrend," Feltes said.
Corn was also hit by chart-based selling as the bellwether July contract fell below its 100-day moving average at $6.91 a bushel, a key level for technical traders.
Earlier in the day, grains and other commodities got a boost after data showed that U.S. employment increased by more than expected in April, with employers adding jobs at the fastest monthly pace in five years.
The data helped dampen concerns by investors over the health of the world's biggest economy.
At the Chicago Board of Trade, July corn settled down 22-1/2 cents at $6.86-1/4 a bushel. July wheat ended up 5-1/2 cents at $7.59-1/2 per bushel and July soybeans ended up 4-1/4 cents at $13.26.
Wheat drew underlying support from concerns about dry conditions in the southern U.S. Plains, as well as France and Germany.
An annual crop tour of Kansas, the top U.S. winter wheat grower, on Thursday projected the state's winter wheat output at 256.7 million bushels, with an average yield of 37.4 bushels per acre. If realized, the wheat crop would be the smallest in Kansas since 1996. (Additional reporting by K.T. Arasu in Chicago, Bruce Hextall in Sydney and Svetlana Kovalyova in Milan; Editing by Alden Bentley and Lisa Shumaker)