GRAINS-Wheat higher as geopolitical tensions return, soybeans stay weak

By Gus Trompiz and Naveen Thukral

PARIS/SINGAPORE, June 2 (Reuters) - Chicago wheat rose on Monday as a Ukrainian drone attack in Russia shifted attention back on the war between the two grain exporters, while renewed U.S.-Chinese trade tensions weighed on the dollar.

Corn edged up as support from wheat and wider commodities offset favourable crop prospects in the United States and Brazil.

Soybeans extended losses to their lowest since mid-April, with tariff worries adding to pressure from benign crop weather in the U.S. Midwest and uncertainty over U.S. biofuel policy.

The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 rose 1.9% to $5.44-1/4 a bushel by 1222 GMT, heading for a fourth daily gain.

After being supported last week by lower than expected ratings of U.S. wheat crops, the market found further impetus in a lower dollar =USD, which makes U.S. grain cheaper overseas, and developments in the conflict between Russia and Ukraine.

Russia and Ukraine began their second round of direct peace talks since 2022 in Istanbul on Monday with no sign they are closer to an agreement, one day after Kyiv struck some of Moscow's nuclear-capable bombers far inside Russian territory.

The dollar's drop, meanwhile, reflected renewed investor worries about tariffs, after U.S. President Donald Trump said on Friday that he planned to double duties on imported steel andaluminium to 50%, and as Beijing hit back against Trump's accusations it violated an agreement on critical minerals shipments. FRX/

"The commodities sector has started the week with strong gains ... in response to heightened geopolitical and tariff tensions," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note.

CBOT corn Cv1 added 0.5% to $4.46-1/4 a bushel while soybeans Sv1 fell 0.5% to $10.37 a bushel.

The latest tensions between Washington and Beijing put the focus back on tariffs that have sidelined U.S. soybeans from its biggest export market.

Demand sentiment in the soybean market has already been dented by a Reuters report that the U.S. government is considering exemptions for some oil refiners from biofuel mandates.

"Soybean demand issues are still a bearish factor for the market," said one oilseed trader in Singapore. "U.S. weather has been benign for the crop, so we are not worried about the crop at this stage."