By P.J. Huffstutter

CHICAGO (Reuters) - Residents in the U.S. Midwest braced for severe storms on Wednesday, as the threat of dangerous tornadoes and forecasts for a possible "derecho" storm system were expected to menace a wide swath from Illinois to Ohio.

Thunderstorms moved over parts of South Dakota, Missouri, Iowa and Illinois, bringing bursts of heavy rainfall totaling more than 2 inches per hour in spots.

In Chicago, residents received an email alert that warned of possible flash flooding, damaging winds and hail. Around midday, however, the sun was still shining.

Early on Wednesday, windy conditions were seen in parts of southern Iowa and Northern Missouri, meteorologists said. Winds gusted up to 66 miles an hour around Muscatine, Iowa, and funnel clouds were spotted forming in parts of Minnesota, according to meteorologists at the Weather Channel.

Strong winds were expected to ramp up again later in the day. The storms may bring waves of heavy rain across parts of Illinois, northern Indiana and northern Ohio overnight and into early Thursday, meteorologists said.

Forecasters said there was the possibility of the system becoming a derecho event, or a long-lasting thunderstorm that moves very quickly and contains fierce, straight-line winds.

Such winds can be stronger than a weak tornado, and reach up to 100 miles an hour, said John Dee, a meteorologist with Global Weather Monitoring.

In 1999, a derecho tore across a 1,300-mile stretch from North Dakota, up into Canada and across New England, with winds hitting 110 miles per hour.

"It flattened a forest. It just took it out like a bulldozer," Dee said.

Such winds could harm crops, but farms were generally expected to benefit from rains.

Rain in the Ohio Valley will provide much-needed relief from short-term dryness for corn and soybeans planted this spring, according to the U.S. Department of Agriculture.

The agency said that locally heavy showers and thunderstorms also eased concerns about soil moisture from eastern North Dakota and South Dakota into Illinois.

Jonathan Jackson, owner of Jackson Lawncare in Columbus, Ohio, was watching for storms to develop that could disrupt his work.

If local forecasts for 1 to 2 inches of rain pan out, "the yards will be too saturated to mow anything," he said. "We'll have to take a day off."

(Additional reporting by Justin Madden and Tom Polansek in Chicago; editing by G Crosse)