GRAINS-Wheat dips on rising dollar; soybeans higher amid Iran conflict

By Heather Schlitz

CHICAGO, March 3 (Reuters) - Chicago Board of Trade wheat futures ticked lower on Tuesday, under pressure from a higher dollar and the end of a short-covering rally that had supported prices the previous week.

Soybeans chopped up and down but ended higher, supported by gains in the crude oil market amid the ongoing war in the Middle East, though concerns over Chinese demand and competition from Brazil kept a lid on prices. Corn was largely unchanged.

Chicago Board of Trade May soybeans SK26 rose 6-1/2 cents to end at $11.70-1/2 per bushel.

Soyoil often tracks crude oil prices, as the biofuel is used as a substitute for fossil fuels. Crude oil gained for the third day in a row as the widening Gulf conflict and threats to shipping in the Strait of Hormuz heightened fears of supply disruptions from the key energy-producing region.

Uncertainty around the Middle East conflict has discouraged traders from making big moves, market players said.

"It's driving people in and out of the market," said Jim Gerlach, president of A/C Trading. "No one wants to go too long or too short right now."

Meanwhile, CBOT May wheat WK26 settled 3-1/4 cents lower to end at $5.74 per bushel, and May corn CK26 settled 3/4 cent higher to $4.46-1/2 per bushel as solid export demand has provided a floor for prices.

Improving weather for the U.S. winter wheat crop and a sharp rally in the dollar have heaped pressure on wheat prices, which have struggled under an ample global supply of wheat.

Rain in the U.S. wheat belt is improving conditions for the crop, though dryness remains a concern, an analyst note said.