GRAINS-Soybeans, wheat fall as traders shake off Iran conflict

By Heather Schlitz

CHICAGO, March 2 (Reuters) - Chicago Board of Trade soybean and wheat futures turned lower on Monday, as traders turned focus away from the outbreak of military conflict in the Middle East that had sparked a wave of short covering and provided spillover strength to soybeans, analysts said.

Chicago Board of Trade's most-active wheat Wv1 fell 15-1/4 cents to $5.76-1/4 a bushel as of 11:20 a.m. CT (1720 GMT). Corn CK26 followed wheat lower, falling 4-3/4 cents to $4.44 a bushel, while soybeans SK26 fell 10 cents to $11.60-3/4 a bushel.

"There was pre-war, geopolitical short covering, and now you're seeing the market settling back," said Dan Basse, president of AgResource Company.

Earlier, soybeans tracked gains in soyoil during the overnight session, which rose alongside crude oil prices amid the ongoing conflict in the Middle East as Iran and Israel stepped up attacks on each other.

By Monday morning, market players had refocused on doubts that China will buy an additional 8 million metric tons of U.S. soybeans as ties between the two countries frayed. China on Sunday condemned the killing of Iran's Supreme Leader Ayatollah Ali Khamenei by U.S.-Israeli airstrikes, stoking uncertainty in the market and adding to concerns that U.S. President Donald Trump's trip to China will not happen as scheduled.

"If we don't have 8 million metric tons, we'll have prices back at February 4, where this whole thing started," Basse said.

U.S. soybeans are uncompetitive on the global market amid a record harvest in Brazil and non-threatening weather in the rival supplier.

Wheat futures also fell as a short-covering rally petered out as improving U.S. crop weather relieved concerns over stress to the winter wheat crop and a refocus on an ample global supply of wheat.