GRAINS-Grains, oilseeds lower as dollar rises

By Renee Hickman

CHICAGO, March 20 (Reuters) - Chicago grains and oilseeds retreated on Friday as the dollar regained ground, while forecasts of rain in dry U.S. wheat belts next week also curbed grain prices.

Grains and oilseed prices have broadly tracked fluctuations in crude oil during the U.S.-Israeli war on Iran, reflecting the widespread use of corn and soyoil in biofuels and investor interest in the crops as an inflation hedge.

Brent crude LCOc1 jumped after a choppy trade on Friday, as plans by the U.S. and its allies to boost oil supplies and restore shipping through the Strait of Hormuz tempered investor jitters over attacks on Gulf energy facilities this week.

The three-week-old Iran war showed no signs of abating and the U.S. prepared to send thousands of additional troops to the Middle East in coming weeks.

The most-active corn contract on the Chicago Board of Trade Cv1 settled down 4-1/4 cents to $4.65-1/2 a bushel, breaking a three-day rally.

CBOT wheat Wv1 ended down 12-3/4 cents to $5.95-1/4 a bushel after rising in the two previous sessions. CBOT soybeans Sv1 lost 7-1/4 cents to finish at $11.61-1/4 a bushel after three sessions of gains.

Mike Zuzolo, president of Global Commodity Analytics and Consulting, said investors were reacting to a Federal Reserve decision on Wednesday to leave interest rates unchanged. He added "we don't have an outright bull market in the energies like we did last week."

The dollar gained ground on Friday as investors pared their bets on Fed rate cuts, given the probability of rising inflation triggered by higher energy prices.

A stronger dollar tends to make U.S. exports more expensive, rendering them less competitive in global markets.

Wheat futures also were hurt by "a real trouncing of the Russian currency, which is improving the Russian demand potential for exports," Zuzolo said.

Also, some weather models are showing rain pushing into the U.S. wheat belt in the coming weeks, adding to pressures.